The following are the financial statements of Acobra, a company in the business of heavy machinery.

Additional Information:

The inventory and accounts receivable balances as of 30 June 2020 were $320,000 and $400,000 respectively. The net cash provided from operating activities for the current year is $1,450,000. Ratios of one of the company's competitors can be seen in the table below.

The inventory and accounts receivable balances as of 30 June 2020 were $320,000 and $400,000 respectively. The net cash provided from operating activities for the current year is $1,450,000. Ratios of one of the company's competitors can be seen in the table below.

Required:

Use the information and formula table provided above to answer the following questions:

a. List and calculate three ratios that you can use for getting a picture of the efficiency of the company’s operation. Comment on each ratio and conclude your analysis. 

b. The competitor’s EPS and P/E ratios are $1.5 and 27 times, respectively. The latest market price of Acobra’s shares is $31.20 per share. Its share capital comprised 1,500,000 shares of $2 each and has not changed throughout the year. Calculate the earnings per share and price earnings ratio and comment how the share market views the company’ future. 

c. Comment about the company's capital structure. 

Answer rating: 100% (QA)

a The three ratios that can be used to analyze the efficiency of the company s operation are the inventory turnover ratio the accounts rece ivable tur... View the full answer