Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

While checking the Liquidity of company Z for the last 3 years 2018, 2019 and 2020 you noticed the followings: 1. The current ratio was

While checking the Liquidity of company Z for the last 3 years 2018, 2019 and 2020 you noticed the followings:
1. The current ratio was decreasing while the quick ratio was increasing over time.
2. The ROE ratio (Net Income/Average total Equity) materially increased although the sales and the net income margin was almost the same.
As a financial analyst kindly explain the above two issues.

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

Business Process Modeling Simulation And Design

Authors: Manuel Laguna, Johan Marklund

3rd Edition

1138061735, 978-1138061736

More Books

Students also viewed these Accounting questions