Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

The project assignment for module one involves the actual calculation and interpretation of some of the financial ratios you've been reading about. If you haven't reviewed them yet please see this presentation on financial ratios and this this chapter on financial analysis. There are two companies I want you to look at - Arrow Company and Plume Inc. Perform a basic financial analysis of each company by calculating the following ratios:

1. Rate of return on Equity (ROE) = Net Income / Shareholders' Equity

This ratio can be re-written as a product of the three principal components:

ROE = (Net Income/Sales) x (Sales/Assets) x (Assets/Shareholders' Equity)

The three components are actually: profit margin, asset turnover, and financial leverage, respectively.

2. Return on Assets (ROA) = Net income/Total Assets

3. Gross Margin = Gross profit/Sales

4. Inventory turnover = Cost of goods sold / Ending inventory

5. The Collection Period = Accounts receivable/Credit sales per day, where credit sales per day (or simply "sales per day" are computed by dividing total sales for the year by 365.

6. Fixed-asset turnover = Sales/Total fixed assets

7. Financial leverage ratios:

Debt-to-assets ratio = Total liabilities/Total assets

Debt-to-equity ratio = Total liabilities/Shareholders' equity

8. Liquidity ratios:

Current ratio = Current assets/Current liabilities

Acid test = (Current assets - Inventory)/Current liabilities

When you have finished your calculations, summarize them in a brief response. The actual calculations should be in table format and be sure to show how you did the math. I will give partial credit for having a part of the calculation correct!

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M923881

Have any Question? 


Related Questions in Basic Finance

Zapata corporation will pay dividends of 500 600 and 700 in

Zapata Corporation will pay dividends of $5.00, $6.00, and $7.00 in the next three years. Thereafter, the company expects its dividend growth rate to be a constant 10 percent. If the required rate of return is 15 percent ...

1 why is the internal revenue service concerned with how

1. Why is the Internal Revenue Service concerned with how partnership agreements in real estate are structured? 2. What is the main difference between the way a partnership is taxed versus the way a corporation is taxed?

1 list as many sources of archival data as you can2 what

1. List as many sources of archival data as you can. 2. What four kinds of research questions are particularly suited for the use of archival data? 3. Describe how you would conduct a content analysis.

In statistics you learn about type i and type ii errors a

In statistics, you learn about Type I and Type II errors. A Type I error occurs when a statistical test rejects a hypothesis when the hypothesis is actually true. A Type II error occurs when a test fails to reject a hypo ...

1 in what sense does an increase in accounts payable

1. In what sense does an increase in accounts payable represent a cash inflow? 2. List several ways to estimate a project's terminal value. 3. What are the tax consequences of selling an investment asset for more than it ...

1 what procedure is used in your state to handle a pledge

1. What procedure is used in your state to handle a pledge of collateral for a mortgage loan? 2. Explain the relationship and purpose of a promissory note and the two primary forms of security instruments. 3. In a forecl ...

According to an article in the wall street journal the us

According to an article in the Wall Street Journal: The U.S. Securities and Exchange Commission on Wednesday filed charges against the investment company GTF Enterprises Inc. . . . The SEC complaint alleges that Gedrey T ...

1 define the following margin account margin requirement

1. Define the following: margin account, margin requirement, and marking to market. 2. Why did futures markets originate in agricultural markets? Would a farmer buy or sell futures contracts? What would a farmer hope to ...

Create a chart to compare dataaccording to mars inc each

Create a chart to compare data. According to Mars, Inc., each bag of M&M's should contain the percentage of colors shown in Figure 27. Purchase five small bags of M&M's and separate the M&M's in each bag by color. Compar ...

1 are inventory ratios meaningful for utilities why2 what

1. Are inventory ratios meaningful for utilities? Why? 2. What does the funded debt to operating property ratio measure for a utility? 3. Is times interest earned meaningful for utilities? Why or why not? 4. For regulate ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen