Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Suppose you are conducting an analysis of the financial performance of Cold Goose Metal Works Inc. over the past three years. The company did not

image text in transcribed

Suppose you are conducting an analysis of the financial performance of Cold Goose Metal Works Inc. over the past three years. The company did not issue new shares during these three years, and has faced some operational difficulties. The company has thus pilot tested some new forecasting strategies for better operations management. You have collected the company's relevant financial data, made reasonable assumptions based on the information available, and calculated the following ratios. Ratios Calculated Year 1 Year 2 Year 3 Price to cash flow 1.60 1.12 0.90 Inventory turnover 3.20 2.56 2.05 Debt to equity 0.30 0.24 0.19 Based on the preceding information, your calculations, and your assumptions, which of the following statements can be included in your analysis report? Check allthat apply. A decline in the inventory turnover ratio could likely be explained by operational difficulties that the company faced, which led to duplicate orders placed to vendors. A decline in the debt-to-equity ratio implies a decline in the creditworthiness of the firm A decline in the inventory turnover ratio can be explained by the new inventory management system that the company recently adopted, which led to more efficient inventory management. A plausible reason why Cold Goose Metal works Inc.'s price-to-cash-flow ratio has decreased is that investors expect lower cash flow per share in the future

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Finance Book

Authors: Stuart Warner, Si Hussain

2nd Edition

1292401982, 978-1292401980

More Books

Students also viewed these Finance questions