Please select THREE of the ratios listed below and perform them for years 2015 and 2016. Please interpret the data by including the following:

(1) Write out the formula for each ratio you selected and show your calculations.

(2) Discuss whether each ratio you selected measures liquidity or profitability and what those terms mean.

(3) What factor(s) contributed to the increase or decrease from last year? Discuss whether those changes were favorable or unfavorable to the company and why?

(4) What does each of your calculated ratios potentially mean for the company’s overall financial condition?

Please assume the market price of the common stock on 12/31/15 was $113.40.

Also, if you need any numbers from 2014 for averages, please use the following:

Cash 300,000 Marketable securities 1,000,000 A/R 345,000 Inventory 647,000 Prepaid 220,000 Total current assets 2,512,000 Long-term investments 2,300,000 Prop, plant, and equip 3,000,000 TOTAL ASSETS 7,812,000

Current liabilities 800,000 Long-term liabilities: Mortgage N/P 0 Bonds Payable 1,500,000 Total LT liabilities 1,500,000 TOTAL LIABILITIES 2,300,000 Preferred 500,000 Common 500,000 Retained Earnings 4,512,000 Total stockholders' EQ 5,512,000 TOTAL LIAB & EQUITY 7,812,000

Make sure you indicate which ratios you have chosen. It is okay to repeat a ratio that has already been presented because you may feel it is important and you may have additional insight to offer. Please also try to choose at least one ratio that has not been written about yet. Let's see if we can get to all of them.

Accounts Receivable Turnover

Current Ratio

Inventory Turnover

Number of Days’ Sales in Inventory

Number of Days’ Sales in Receivables

Number of Times Interest Charges Are Earned

Number of Times Preferred Dividends Are Earned

Quick Ratio

Ratio of Fixed Assets to Long-Term Liabilities

Ratio of Liabilities to Owner’s (Stockholders’) Equity

Working Capital

Dividend Yield

Dividends per Share

Earnings per Share (EPS) on Common Stock

Price-Earnings (P/E) Ratio

Ratio of Sales to Assets

Rate Earned on Common Stockholders’ Equity

Rate Earned on Stockholders’ Equity

Rate Earned on Total Assets

Answer rating: 100% (QA)

1 Write out the formula for each ratio you selected and show your calculations I have chosen the following three ratios 1 Accounts Receivable Turnover 2 Quick Ratio 3 Ratio of Sales to Assets 1 Accoun... View the full answer