The following are financial ratios used by analysts: Liquidity: current ratio; cash flow from operations to

Question:

The following are used by analysts:
• Liquidity: current ratio; cash flow from operations to current liabilities
• Solvency: debt to equity; debt to assets
• Profitability: return on assets; return on equity

Required:
Assume that you are comparing the of companies from two countries discussed in this chapter. Discuss how the accounting practices identified in Exhibit 4-5 would affect your comparisons for each of the six ratios listed.

Financial Ratios
The term is enough to curl one's hair, conjuring up those complex problems we encountered in high school math that left many of us babbling and frustrated. But when it comes to investing, that need not be the case. In fact, there are ratios that,...