Calculate (and document) suitable ratios with respect to of a) liquidity, b) solvency, c) profitability and d)
Question:
Calculate (and document) suitable ratios with respect to of a) liquidity, b) solvency, c) profitability and d) efficiency BRIEFLY (maximum of 400 words) use these ratios to respond to the following 3 questions. Long rambling answers will not be graded - if you understand the ratios, you can be precise in answering.
1. If this company approached you to buy your product on your normal 30-day
trade credit terms, would you extend them trade credit. Justify your
agreement to sell to them or not to sell to them using financial ratios
2. If this firm approached you to lend them long term funds, would you advance
funds to them. Why or why not.
3. Explain and quantify why the percentage return on equity to shareholders is
significantly higher than the percentage of operating return on assets used.
Financial Accounting Tools for Business Decision Making
ISBN: 978-1118644942
6th Canadian edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine