The following is a list of the ratios and values we have calculated in this text: Instructions
Question:
Instructions
(a) Classify each of the above ratios as a liquidity (L), solvency (S), or profitability (P) ratio.
(b) For each of the above ratios, indicate whether a higher result is generally considered better (B) or worse (W).
Solvency means the ability of a business to fulfill its non-current financial liabilities. Often you have heard that the company X went insolvent, this means that the company X is no longer able to settle its noncurrent financial...
Asset turnover Average cllection period Cash current debt coverage Cash total debt coverage urnni ratio Days in inventory Debt to total assets Dividend yield Earnings per share Free cash flow Gross profit margin Inventory turnover Payout ratio Price-earnings ratio Profit margin Receivables turnover Return on assets Return on common shareholders' equity Times interest earned Working capital
Step by Step Answer:
a b Asset turnover P B Average collection period L W ...View the full answer
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
Related Video
Inventory turnover is a key metric that helps businesses evaluate the efficiency of their operations. A high turnover ratio is generally considered positive, indicating that the company is effectively selling its inventory and making efficient use of its resources. On the other hand, a low turnover ratio may indicate issues such as overstocking or slow sales and may require further examination to identify and address the underlying causes. Businesses use this ratio to make decisions about inventory levels, production schedules, and pricing strategies. It also helps businesses to identify areas where they may need to make improvements, such as reducing lead times for production or optimizing sales and marketing efforts. Additionally, inventory turnover is used by investors and analysts as a key performance indicator to evaluate the financial health and growth potential of a company.
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