Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Review the financial ratios of company X and its competitor and fill in the blanks. Now fill in the blanks: Company X Competitor ROE (%)
Review the financial ratios of company X and its competitor and fill in the blanks.
Now fill in the blanks:
Company X | Competitor | |
ROE (%) | 48.6 | 54 |
ROA (%) | 21.6 | 36 |
Debt-to-equity | 1.25 | 0.5 |
Current ratio | 1.47 | 1.25 |
Quick ratio | 0.67 | 0.45 |
Net profit margin (%) | 18 | 16 |
Financial leverage | 2.25 | 1.5 |
Interest coverage | 0.75 | 35 |
Total asset turnover | 1.2 | 2.25 |
Days of sales outstanding | 83 | 77 |
Days of inventory outstanding | 189 | 210 |
Now fill in the blanks:
(Company X OR Competitor) has used more debt to finance its assets, i.e., has used greater financial leverage. This company seemed to have (sufficient OR insufficient) liquid assets to cover its short term liabilities and have (sufficient OR insufficient) operating profits to cover its interest expense.
Note: I do not have access to excel. Please do not use excel to answer this question. Please and thank you.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started