Question

The Tristar MutualFundmanager isconsideringaninvestment inthe stockofBest Computerand
asks for your opinion regarding the company. Best Computer is a computer hardware sales and
service company. Approximately 50% of the company’s revenues come from the sale of computer
hardware. The rest of the company’s revenues come from hardware service and repair contracts.
Below are financial ratios for Best Computer and comparative ratios for Best Computer’s indus-
try. The ratios for Best Computer are computed using information from its financial statements.


.:.

Required:
a. Interpret the ratios of Best Computer and draw inferences about the company’s financial performance and financial condition—ignore the industry ratios.
b. Repeat the analysis in (a) with full knowledge of the industry ratios.
c. Indicate which ratios you consider to deviate from industry norms. For each Best Computer ratio that deviates from industry norms, suggest two possible explanations.



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  • CreatedJanuary 22, 2015
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