Why is it important to know a firm’s accounting rules before making any conclusions about its performance from ratios analysis?
Answer to relevant QuestionsA firm has an ROE of 20 percent. The industry average ROE is 12 percent. Is this a good or poor sign about the management of the firm?Mr. Husker’s Tuxedos Corp. ended the year 2015 with an average collection period of 32 days. The firm’s credit sales for 2015 were $56.1 million. What is the year-end 2015 balance in accounts receivable for Mr. ...Brenda’s Bar and Grill has current liabilities of $15 million. Cash makes up 10 percent of the current assets and accounts receivable makes up another 40 percent of current assets. Brenda’s current ratio is 2.1 times. ...Leonatti Labs’ year-end price on its common stock is $35. The firm has total assets of $50 million, debt ratio of 65 percent, no preferred stock, and 3 million shares of common stock outstanding. Calculate the ...Use the following information to complete the balance sheet below; assume all sales are credit sales.Current ratio = 2.2 timesCredit sales = $1,200mAverage collection period = 60 daysInventory turnover = 1.50 timesTotal ...
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