Wilson Limited has total assets of $35,000,000 and manufactures fine hand tools. Selected financial ratios and...
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Wilson Limited has total assets of $35,000,000 and manufactures fine hand tools. Selected financial ratios and industry averages are as follows: Wilson Industry 2023 2022 2021 Average Current ratio 2.41 2.12 2.04 2.28 Quick ratio 1.11 1.10 1.05 1.22 Inventory turnover 2.62 2.78 2.90 3.50 Return on equity 0.16 0.14 0.15 0.11 Debt-to-equity ratio 1.44 1.37 1.41 0.95 Return on assets .12 .11 .11 .10 Asset turnover 3.14 3.01 3.00 3.70 Operating margin .06 .05 .05 .05 Referring to the information presented above: 1. Identify two financial ratios of particular interest to: a. A supplier, about to decide whether to sell to Wilson on credit. (2 marks) b. An investment banker, consulting with Wilson on a potential public offering of common shares. (2 marks) 2. Discuss what the financial ratios (in the table above) reveal about Wilson. (6 marks) Wilson Limited has total assets of $35,000,000 and manufactures fine hand tools. Selected financial ratios and industry averages are as follows: Wilson Industry 2023 2022 2021 Average Current ratio 2.41 2.12 2.04 2.28 Quick ratio 1.11 1.10 1.05 1.22 Inventory turnover 2.62 2.78 2.90 3.50 Return on equity 0.16 0.14 0.15 0.11 Debt-to-equity ratio 1.44 1.37 1.41 0.95 Return on assets .12 .11 .11 .10 Asset turnover 3.14 3.01 3.00 3.70 Operating margin .06 .05 .05 .05 Referring to the information presented above: 1. Identify two financial ratios of particular interest to: a. A supplier, about to decide whether to sell to Wilson on credit. (2 marks) b. An investment banker, consulting with Wilson on a potential public offering of common shares. (2 marks) 2. Discuss what the financial ratios (in the table above) reveal about Wilson. (6 marks)
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