1.The business problem most likely the case in the previous set of ratios is: A

A.Expenses increasing faster than revenues.

B.Falling gross margins.

C.Falling sales.

D.Accounts payable is being used to acquire fixed assets.

Transcribed Image Text:

t t 1. Situation #1 + LIQUIDITY 2014+ 2015 2016+ Current Ratio 1.450 1.460+ 1.445 Quick Ratio 0.580+ 0.585 0.578 Inventory: Working Capital 1.266 1.249 1.275 Current Debt: Inventory 1.755+ 1.742+ 1.762 < PROFITABILITY Gross Profit: Net Sales 47.00% 45.00%+ 43.00% Profit on Sales 1.68% 0.48%+ -.072%+ Net Profit: Total Assets 1.37% 0.39%+ -0.59%+ Net Profit: Net Worth 5.14% 1.45%+ -2.22%+ + ACTIVITY Sales: Receivables 9.865+ 9.772+ 9.912+ Days Sales Outstanding 37.000+ 37.350+ 36.825 Sales: Inventory 5.000+ 4.970+ 5.015+ Inventory Turnover 2.650 2.734+ 2.859 Days Sales Inventory 137.736+ 133.524 127.686+ Sales: Net Worth < 3.058 3.014+ 3.081 Sales: Working Capital 6.330 6.207+ 6.393 Fixed Assets: Net Worth < 1.400+ 1.381+ 1.410 Fixed Asset Turnover 2.184 2.182+ 2.185+ Total Asset Turnover 0.815 0.813+ 0.817+ Cash Velocity 9.780+ 9.735+ 9.803 Average Payable Period 41.000 39.828 37.969+ CAPITAL STRUCTURE Total Debt: Net Worth < 2.750+ 2.705 2.773 Current Debt: Net Worth 1.074 1.057+ 1.082+ Long Term Debt: Net Worth < 1.676 1.649 1.691 Long Term Debt: Working Capital 3.470 3.396 3.509 Long Term Debt: Fixed Assets 1.197+ 1.194+ 1.199 Coverage of Fixed Charges 8.400+ 3.114 -2.171 < < The business problem most likely the case in the previous set of ratios is: + A. Expenses increasing faster than revenues. < B. Falling gross margins. < C. Falling sales. < D. Accounts payable is being used to acquire fixed assets. t t 1. Situation #1 + LIQUIDITY 2014+ 2015 2016+ Current Ratio 1.450 1.460+ 1.445 Quick Ratio 0.580+ 0.585 0.578 Inventory: Working Capital 1.266 1.249 1.275 Current Debt: Inventory 1.755+ 1.742+ 1.762 < PROFITABILITY Gross Profit: Net Sales 47.00% 45.00%+ 43.00% Profit on Sales 1.68% 0.48%+ -.072%+ Net Profit: Total Assets 1.37% 0.39%+ -0.59%+ Net Profit: Net Worth 5.14% 1.45%+ -2.22%+ + ACTIVITY Sales: Receivables 9.865+ 9.772+ 9.912+ Days Sales Outstanding 37.000+ 37.350+ 36.825 Sales: Inventory 5.000+ 4.970+ 5.015+ Inventory Turnover 2.650 2.734+ 2.859 Days Sales Inventory 137.736+ 133.524 127.686+ Sales: Net Worth < 3.058 3.014+ 3.081 Sales: Working Capital 6.330 6.207+ 6.393 Fixed Assets: Net Worth < 1.400+ 1.381+ 1.410 Fixed Asset Turnover 2.184 2.182+ 2.185+ Total Asset Turnover 0.815 0.813+ 0.817+ Cash Velocity 9.780+ 9.735+ 9.803 Average Payable Period 41.000 39.828 37.969+ CAPITAL STRUCTURE Total Debt: Net Worth < 2.750+ 2.705 2.773 Current Debt: Net Worth 1.074 1.057+ 1.082+ Long Term Debt: Net Worth < 1.676 1.649 1.691 Long Term Debt: Working Capital 3.470 3.396 3.509 Long Term Debt: Fixed Assets 1.197+ 1.194+ 1.199 Coverage of Fixed Charges 8.400+ 3.114 -2.171 < < The business problem most likely the case in the previous set of ratios is: + A. Expenses increasing faster than revenues. < B. Falling gross margins. < C. Falling sales. < D. Accounts payable is being used to acquire fixed assets.