Chapter 3 (03-2, 03-3) questions 1. Classify each of the following ratios according to a ratio category Cliquidity ratio, asset management ratio debt management ratio, profitability ratio, or market value ratio). LGH strouge LGHS) Current ratio Inventory turnover c. Return on assets 4. Average payment period Times interest earned Capital intensity Equity multiplier Basic earnings power 2. For each of the following actions, determine what would happen to the current ratio. Assume nothing else on the balance sheet changes and that net working capital is positive@) Accounts receivable are paid in cash. Notes payable are paid off with cash. Inventory is sold on account Inventory is purchased on account Accrued wages and taxes increase Long-term debt is paid with cash. Cash from a short-term bank loan is received 3. Explain the meaning and significance of the following ratios. @ LGH sro LGHS) 2 Quick ratio Average collection period e. Return on equity d. Days' sales in inventory Debt ratio Profit margin Accounts payable turnover arket-to-book ratio Chapter 3 (P3-26) 3-26 DuPont Analysis You are considering investing in Nuran Security Services. You have been able to locate the following information on the firm: Total assets are $24 million, accounts receivable are $3-3 million, ACP is 25 days, net income is $3-5 million, and debt-to-equity is 1.2 times. Calculate the ROE for the firm. (LG36)