Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

Ratio comparisions Robert Arias recently inherited a stock portfolio from his uncle.wishing to learn more about the companies that he is now invested in,Robert performs a ratio analysis on each one and decides to compare them to each other. Some of his ratios are listed below

Island electric utility- Burger heaven-Fink software-Roland motors

Current ratio 1.10 1.3 6.8 4.5

quick ratio 0.90 0.82 5.2 3.7

debt ratio 68.2% 46.1% 0% 34.9%

profit margin 6.2% 14.3% 28.5% 8.4%

Assuming that his uncle was a wise investor who assembled the portfolio with care, Robert finds the wide differences in these ratios confusing.help him out

a. What problems might Robert encounter in comparing these companies to one another on the basis of their ratios?

b. Why might the current and quick ratios for the electric utility and the fast food stock be so much lower than the same ratio for the other company?

c. Why might it be all right for the electric utility to carry a large amount of debt,but the same is not true for the software company?

d. Why wouldn't investors invest all of their money in software companies instead of less profitable companies?(focus on risk and reward)

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M941560

Have any Question? 


Related Questions in Basic Finance

1 explain the differences between transactional and

1. Explain the differences between transactional and relationship marketing. How do these differences lead to increasing emphasis on logistical performance in supply chain management? 2. Why are the four primary service ...

1 why is it important for the financial manager to

1. Why is it important for the financial manager to understand the inventory control techniques used by production/operations managers? How does controlling inventory impact a firm's profitability? 2. What role does the ...

Explain the advantages and disadvantages of implementing

Explain the advantages and disadvantages of implementing portfolio insurance using stock and puts in comparison to using stock and futures in a dynamic hedge strategy ? Explain how a portfolio manager might justify the p ...

1 define the followinga a conditional sales contractb a

1. Define the following: a. A conditional sales contract b. A chattel mortgage 2. Under what conditions would a firm prefer the following: a. A "fixed-rate" term loan from a bank b. A "floating-rate" term loan, with the ...

Question 1 when ranking security returns from highest

Question 1. When ranking security returns from highest return to lowest return, the data shows that the annualized returns are as follows: Large stocks, small stocks, long-term corporate bonds, long-term government bonds ...

Explain how a short call added to a protective put forms a

Explain how a short call added to a protective put forms a collar and how it changes the payoff and up-front cost? Explain the process by which the profit of a short straddle closed out prior to expiration is influenced ...

1 what are the advantages and disadvantages of usinga

1. What are the advantages and disadvantages of using (a) figures, (b) tables, and (c) text to report the results of experiments in the research report? 2. Differentiate between random sampling and random assignment. Whi ...

What does the word sustainable mean in sustainable growth

What does the word sustainable mean in "sustainable growth model"? In what ways can the sustainable growth model highlight conflicts between a firm's competing objectives?

How would you identify the best nut factor for your

How would you identify the best nut factor for your application? How much torque would be required to tighten an ASTM A193 Gr. B16 bolt with a 31/4-8 thread to 60% of yield? Why does a wrench create a side load on the bo ...

1 what are the risks of global investment2 how can a

1. What are the risks of global investment? 2. How can a derivative security be used to hedge portfolio risk?

  • 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

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

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