Question

Refer to the financial statements of Eikner, Inc. in Problem 30.
Required:
(a) Compute the liquidity and leverage ratios discussed in this chapter for Eikner, Inc. for 2007 through 2009.
(1) Overall, did the company’s liquidity improve or deteriorate between 2007 and 2009? Explain.
(2) Did this company become more or less lever-aged between 2007 and 2009?
(b) Compute the activity ratios discussed in this chapter for Eikner, Inc. for 2008 and 2009.
(1) Indicate which of these ratios improved and which deteriorated between 2007 and 2009.
(2) Overall, did the company do a better job of managing its accounts receivable, inventory, and total assets in 2009 compared with 2008? Explain.
(c) Compute the profitability and market strength ratios discussed in this chapter for Eikner, Inc. for 2007 through 2009. (Note: The Company had total assets on January 1, 2007, of $425,000, whereas the company’s total stockholders’ equity on that date was $186,000.) Market prices for the company’s stock were $8.50 (2007), $7.75 (2008), and $6.50 (2009).
(1) Evaluate the company’s profitability ratios for the period 2007–2009. Did the company become more or less profitable over this time period? Explain.
(2) Evaluate the company’s market strength ratios fortheperiod2007–2009. What do the changes in these ratios over this period indicate?


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