Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The following ratios are for the Roval Co., Blue Corp., and their industry averages. Roval Co. Blue Corp. Industry Average Current ratio 700% 200% 480%

The following ratios are for the Roval Co., Blue Corp., and their industry averages.

Roval Co.

Blue Corp.

Industry Average

Current ratio

700%

200%

480%

Quick ratio

180%

100%

230%

A/R turnover

12 times

12 times

6 times

Return on assets

21%

29%

23%

Total asset turnover

7 times

3 times

5 times

Required:

a.. Explain a potential factor for the large difference between current and quick ratios of Roval, compared to differences of Blue and industry average.

b. Comment on the short-term liquidity and asset utilization ratios of the Roval and Blue, in relation to the industry averages.

c. Determine the operating profit margins of Roval, Blue, and industry.

d. Discuss the attractiveness of investment in Roval v. Blue, considering the respective profitability & turnover ratios, relative to the industry averages.

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_2

Step: 3

blur-text-image_3

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

Accounting and auditing research tools and strategies

Authors: Thomas Weirich, Thomas Pearson, Natalie Tatiana

8th edition

9781118806487, 1118027078, 1118806484, 978-1118027073

More Books

Students also viewed these Accounting questions

Question

(a) Define the objectives of the experiment.

Answered: 1 week ago