Presented below are selected ratios for four firms. Tweeter is a distiller, Clinton is a jewelry retailer,
Question:
Required:
1. Explain why the long-term debt to equity ratio is so much higher for the airline and hotel chain than it is for the distiller and jewelry retailer.
2. Explain why the turnover ratios vary so much among the four firms.
3. Explain why the return on equity for the airline and hotel chain is higher than for the distiller and jewelry retailer when their operating income and net income percentages are considerably smaller?
Smith Tweeter Clinton Orlando Short-term liquidity ratio Current ratio 1.5 3.5 0.9 1.4 Debt management ratio Long-term debt to equity Asset efficiency ratios Accounts receivable turnover 209.48 0.24 0.20 562.11 19.72 7.66 17.07 11.09 Inventory turnover Profitability ratios Operating income Net income 7.24 2.30 0.95 31.43 4.2% 17.7% 15.5% 9.6 9.2% 13.1 2.2 5.4 11.9 Return on assets 8.6 1.8 7.9 Return on equity 23.7 14.9 49.2 34.5
Step by Step Answer:
1 The longterm debt to equity ratio is so much higher for the airline and the hotel chain because th...View the full answer
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.
Students also viewed these Cost Accounting questions
-
Presented below are selected ratios for four firms: Firm A is a distiller, Firm B is a jewelry retailer, Firm C is an airline, and Firm D is a hotel chain. Required: 1. Explain why the long-term...
-
Presented below are selected ratios for four firms. Rosemont is a distiller, Adler is a jewelry retailer, Menzel is an airline, and Gallagher is a hotel chain. Required: 1. Explain why the long-term...
-
Presented below are selected ratios for four firms: Firm A is a heavy equipment manufacturer, Firm B is a newspaper publisher, Firm C is a food manufacturer, and Firm D is a grocery chain. Required:...
-
You make a one-time investment of $400 and leave it for 5 years, earning an annual interest rate of 7%. How much interest will you have earned after 5 years? If you leave the entire amount in your...
-
Light with wavelength k falls normally on a long rectangular slit of width b. Find the angular distribution of the intensity of light in the case of Fraunhofer diffraction, as well as the angular...
-
Write a function that will blend three sounds together. Start with part of the first sound, then a blend of sound1 and sound2, and then a blend of sound2 and sound3, and end with the rest of sound3.
-
The probability that the first stage of a numerically controlled machining operation for high-rpm pistons meets specifications is 0.90 . Failures are due to metal variations, fixture alignment,...
-
Iowa Company is a multi-product firm. Presented below is information concerning one of its products, the Hawkeye. Instructions Compute cost of goods sold, assuming Iowa uses: (a) Periodic system,...
-
[6 points] (a) What would be the total time to it would take to send the following ASCII message over a 9600 bps communications channel: messageone (1) If asynchronous transmission was being used....
-
1. East Coast Yachts uses a small percentage of preferred stock as a source of financing. In calculating the ratios for the company, should preferred stock be included as part of the companys total...
-
Refer to the financial statements for Austin Logo Inc. in Problem 12-88B. Refer to Problem 12-88B, Austin Logo Inc. Consolidated Income Statement s (In thousands) Austin Logo Inc. Consolidated...
-
Refer to the financial statements for Richardson Socks Company in Problem 12-89B and the data below. Data from problem 12-89B, Richardson Socks Company Consolidated Income Statement s (In thousands...
-
Before a championship football game, the referee is given a special commemorative coin to toss to decide which team will kick the ball first. Two minutes before game time, he receives an anonymous...
-
While City-100's unit contribution margin is low, it is still positive. Conceptually, how can the controller's proposal - to stop producing and selling City-100's and instead make Super-300's for...
-
An analysis of how much a service will cost versus how much you will gain from having that service performed is called a(n?
-
Why working over 40 hours a week is not considered overtime under flex time options?
-
Entries in a transfer journal must include: the date of the transfer the amount transferred to and from each ledger account the names of all ledger accounts to be debited or credited, including...
-
This case is intended to provide an opportunity to understand basic manufacturing cycle activities and how the accounting software captures?
-
A college administrator suggests that student housing rates have increased from one academic year to the next. The table shows the rates (in dollars per academic year) for 12 student housing...
-
The figure shows a bolted lap joint that uses SAE grade 8 bolts. The members are made of cold-drawn AISI 1040 steel. Find the safe tensile shear load F that can be applied to this connection if the...
-
The following information is available for Conger Company for the month of January: expected cash receipts $59,000; expected cash disbursements $67,000; and cash balance on January 1, $12,000....
-
On March 20, Garbers petty cash fund of $100 is replenished when the fund contains $19 in cash and receipts for postage $40, supplies $26, and travel expense $15. Prepare the journal entry to record...
-
Jack Woodling is concerned with control over mail receipts at Yount Sporting Goods. All mail receipts are opened by Bill Morten. Bill sends the checks to the accounting department, where they are...
-
Using the following information: a. The bank statement balance is $3,048. b. The cash account balance is $3,300. c. Outstanding checks amount to $755. d. Deposits in transit are $809. e. The bank...
-
Determine the average tax rate and the marginal tax rate for each of the following instances: Use the Tax Tables for taxpayers with taxable income under $ 1 0 0 , 0 0 0 and the Tax Rate Schedules for...
-
A machine was bought on 1 st January 2 0 1 7 for $ 1 2 , 0 0 0 . The policy is to depreciate the machine at 1 0 % on reducing balance method at the end of each year, ending on 3 1 st December....
Study smarter with the SolutionInn App