Discussion Assignment

In the discussion forum you are expected to participate often and engage in deep levels of discourse. Please post your initial response as early as possible and continue to participate throughout the unit. You are required to post an initial response to the question/issue presented in the Forum and then respond to at least 3 of your classmates' initial posts. You should also respond to anyone who has responded to you.

You are encouraged to research outside sources and, of course, cite them. Do not, however, quote sources word-for-word, but rather, respond to the Discussion Forum Question in your own words.

1. What three factors would influence your evaluation as to whether a company's current ratio is good or bad, why?

2. Suggest several reasons why a 2:1 current ratio might not be adequate for a particular company.

3. Why is working capital given special attention in the process of analyzing balance sheets?

4. What does the number of days' sales uncollected indicate and who would be interested in these ration?

5. What does a relatively high accounts receivable turnover indicate about a company's short-term liquidity?

6. Why is a company's capital structure, as measured by debt and equity ratios, important to financial statement analysts?

7. How does inventory turnover provide information about a company's short-term liquidity?

8. Discuss why there may or may not be ratios that would be more important in a service vs manufacturing environment and which rations would those be?

After you've completed the questions above, please provide a brief explanation of how this information is important in managerial decision making.