Question 1 Explain why the comparison of financial ratios may be more meaningful than the comparison...

 

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Question 1 Explain why the comparison of financial ratios may be more meaningful than the comparison of figures straight from the financial statements (10 marks). Question 2 Below are financial ratios for XYZ Corporation and comparative ratios for XYZ Corporations industry. The ratios for XYZ Corporation are computed using information from its financial statements. XYZ Corporation Current ratio Return on assets Gross profit margin Net profit margin Fixed asset turnover 3.45 31.4% 36.0% 8.2% 15.30 Industry Average 3.10 30.0% 34.3% 8.0% 15.55 Required: Interpret the ratios of XYZ Corporation and draw conclusions about the company's financial performance and financial condition with full knowledge of the industry ratios. (15 marks) Question 3 What information do liquidity ratios yield about a firm? Give two examples of liquidity ratios (10 marks) Question 1 Explain why the comparison of financial ratios may be more meaningful than the comparison of figures straight from the financial statements (10 marks). Question 2 Below are financial ratios for XYZ Corporation and comparative ratios for XYZ Corporations industry. The ratios for XYZ Corporation are computed using information from its financial statements. XYZ Corporation Current ratio Return on assets Gross profit margin Net profit margin Fixed asset turnover 3.45 31.4% 36.0% 8.2% 15.30 Industry Average 3.10 30.0% 34.3% 8.0% 15.55 Required: Interpret the ratios of XYZ Corporation and draw conclusions about the company's financial performance and financial condition with full knowledge of the industry ratios. (15 marks) Question 3 What information do liquidity ratios yield about a firm? Give two examples of liquidity ratios (10 marks)