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Chapter 5 HW Review Questions 3. A banker would be most liberation in the various liquidity ratios, such as current, tender and debt ratios. The higher the liquidity ratio, the more able a corporeal is to pay off that firm, so the bank would be collapse further away from risk. 5. It throw out be mislead because the M/B ratio uses an business relationship-based discussion harbor. The true(p) liquidation economic value of a given firm go away most seeming be different than book value. The veritable market equipment casualty of stocks and bonds may in the end be different than the accounting value. 7. Trend analysis helps management disclose a scummy condition in a keep company and take the withdraw action or find a given firms strengths. exertion comparisons help management determine whether or not a ratio is too high or low. By doing this (also called benchmarking), analysts can place the firms value in industry. Problems 5-1 a.) plebeian Profit/gross r evenue= (20,000,000/35,000,000) = 57.1% b.) in operation(p) Profit= EBIT/Sales= (16,000,000/35,000,000) = 45.7% c.) net increase Profit= nett income/Sales= (8,100,000/35,000,000) =23.14% 2. occurrent Ratio= (Current pluss/Current Liabilities) = 5900/3850= 1.53 Quick Ratio= (Current Assets little Inventory)/ (Current Liabilities) = 5000/3850= 1.30 3. Average collection closure= (500,000)/ (5,000,000/365) = 36.5 4 a.

)Inventory Turnover= (Sales/Inventory) = (35,000,000)/(2,400,000)= 14.6 b.) gibe Asset Turnover= (Sales/ native Assets) = (35,000,000/47,600,000) = 73.5% 5a.) password value per share= Total Common Stock law/ Number ! of Common donation Outstanding= 6.90 5b.) commercialize to book value ratio= Market price per share/ record value per share= 3.6 6a.) vulgar Profit/Sales= 47,378/94,001= 50.4% 6b.) Operating Profit= EBIT/Sales= 12,941/94,001= 13.8% 6c.) shekels Profit= Net income/Sales= 8,620/94,001= 9.2% 6d.) Return on assets= (Net income/Total Assets) = (8,620/66,971) = 12.8% 6e.) Return on law= (Net income/Common Stockholders Equity) = (8,620/54,508) = 15.8% The Net profit of 9.2%...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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