Using the ratios in this chapter, respond to the following prompts relating to Ms. Smith and Smith Dental Supply:

Who are or would be the primary users of Smith Dental Supply statements?

If you were deciding to invest in Smith Dental Supply, what are some of the ratios you consider most relevant to form your decision? Why?

If you were the loan officer at the bank, what are some of the ratios that are most relevant to calculate when deciding on Ms. Smiths loan application? Why?

Why is ratio analysis useful (or not) in making important business decisions about her business? Are there any shortcomings?

Should business decisions be made solely on the ratios as Ms. Smith always questions to her accountant? Why or why not?

As tempting as it is, do not respond to the questions as if you are completing discussion questions at the end of a chapter. Think about these as a whole and develop your rationale for supporting the loan or the stock investment decision.