Calculate (and document) suitable ratios with respect to of a) liquidity, b) solvency, c) profitability and d) efficiency BRIEFLY (maximum of 400 words) use these ratios to respond to the following 3 questions. Long rambling answers will not be graded - if you understand the ratios, you can be precise in answering.

1. If this company approached you to buy your product on your normal 30-day

trade credit terms, would you extend them trade credit. Justify your

agreement to sell to them or not to sell to them using financial ratios

2. If this firm approached you to lend them long term funds, would you advance

funds to them. Why or why not.

3. Explain and quantify why the percentage return on equity to shareholders is

significantly higher than the percentage of operating return on assets used.

 

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Data Set CUSABA INCORPORATED ASSETS Cashi Marketable Securities Accounts Receivable Inventory Prepaid Expenses Property Plant and Equipment Goodwill Total Assets BALANCE SHEET AS AT DECEMBER 31, 2019 LIABILITIES AND EQUITY $9.000 Accounts Payable 2,500 Bank Loan 225,000 Accrued Expenses 162.500 Interest Payable 3.500 Long Term Bonds Payable 82,500 Common Stock 15.000 Retained Earnings $500.000 Total Liabilities and Equity CUSABA INCORPORATED INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2019 $37,500 87,500 1.500 500 85,000 88,000 200,000 $500,000 Main Content Data Set CUSABA INCORPORATED ASSETS Cashi Marketable Securities Accounts Receivable Inventory Prepaid Expenses Property Plant and Equipment Goodwill Total Assets BALANCE SHEET AS AT DECEMBER 31, 2019 LIABILITIES AND EQUITY $9.000 Accounts Payable 2,500 Bank Loan 225,000 Accrued Expenses 162.500 Interest Payable 3.500 Long Term Bonds Payable 82,500 Common Stock 15.000 Retained Earnings $500.000 Total Liabilities and Equity CUSABA INCORPORATED INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2019 $37,500 87,500 1.500 500 85,000 88,000 200,000 $500,000 Main Content

Answer rating: 100% (QA)

Ratios a Liquidity Ratios 1 Current Ratio textCurrent Ratio fracCurrent AssetsCurrent Liabilities 2 Quick Ratio textQuick Ratio fracCash Marketable Se... View the full answer