In: Finance

3. (a) Define the current ratio and return on assets ratio. (b) State what financial management problem each of these financial ratios could be used to identify. (c) What would be a good benchmark to use for each of these financial ratios?

Current ratio is defined as current assets divided by current liabilities. Its a form of liquidity ratio that measures a company's ability to pay short term obligations which are due within a year. Current assets are those assets which can be converted into cash within a year. In the same way current liabilities will be those liabilities which can be paid off within a year. Every industry has different optimal current ratio so current ratio of a firm above the industry average is considered good and below it is considered bad. Usually current ratio in the range of 1.5 to 2 is considered good.

Return on assets ratio: Its a probability ratio where the net income earned by the average total assets is measured. It is calculated as ROA = Net assets divided by Average total assets. Its tells us how much net income is generated by the total assets employed in the firm. Average total assets is the average of the assets of last two years.

b) Current ratio is used to identify the liquidity of the firm. It helps us to know the firm's capacity to pay up current liabilities if they demand it. The best possible way for the firm to dispose the current liabilities is how fast they can convert the current assets into cash to pay off current liabilities. If the current ratio of the firm is less than 1, it states that the firm has a problem to dispose off its current liabilities with current assets and will need to depend upon its fixed assets. While a current ratio of above 1 is a comfortable position of the firm.

Assets turnover ratio: It is just a measurement of Net income earned by the firm by employing its total assets. The larger the ratio the better it is for the investors and shareholders. It indicates that the firm is able to generate good profits with the same assets and a lower number would indicate the company's inability to earn profits with the deployed assets.

c) While the benchmark for any company will change as per the industry it's in. A heavy machine industry would have a different current ratio than a company in FMCG industry. But usually a current ratio of 1.5 is considered healthy.

For asset turnover ratio it is beneficial if we compare the ratio with its previous year ratio. But usually if a firm is generating profits of more than 5% to 10% is good anything less than that is considered not good. But ideally every ratio must be checked with the average industry ratio and then must be compared with the firm.

What assets are not in the Quick Ratio that are in the Current
Ratio? What makes these assets different? Please explain

1. Quick Ratio= current assets-inventories/ current
liabilities
2. Debt to Assets ratio= total debt/total assets
3. Earnings Per Share (EPS)=total earnings/outstanding
shares
(must first solve net income-preferred divideneds= total
earnings)
4. Net Income (Net profit)=total revenues-total expenses
I need help finding the answer to these equations for Target
Corporation for 2015 and 2016.
please refer to the links for the 10k reports for the
company.
2015-
https://corporate.target.com/_media/TargetCorp/annualreports/2015/pdfs/Target-2015-Annual-Report.pdf
2016-
https://corporate.target.com/_media/TargetCorp/annualreports/2016/pdfs/Target-2016-Annual-Report.pdf?ext=.pdf

What is the purpose of a financial ratio analysis?
Identify and define a financial ratio for each of the following
categories:
Liquidity Ratios
Leverage Ratios
Activity Ratios
Profitability Ratios
Growth Ratios
Which do you think is/are most important to a company
in making financial forecasts?
Using research, obtain information on the financial ratios from
McDonald's identified above for the organization.

What is the purpose of a financial ratio analysis? Identify and
define a financial ratio for each of the following categories:
Liquidity Ratios
Leverage Ratios
Activity Ratios
Profitability Ratios
Growth Ratio
Which do you think is/are most important to a company in making
financial forecasts? Why?

What is the purpose of a financial ratio analysis? Identify and
define a financial ratio for each of the following categories: o
Liquidity Ratios o Leverage Ratios o Activity Ratios o
Profitability Ratios o Growth Ratios Which do you think is/are most
important to a company in making financial forecasts? o Then find
the Liquidity Ratios, Leverage Ratios, activity ratio,
profitability ratios, and growth ratios for The Bank of New York
Mellon Corporation APA format

What is the purpose of a financial ratio analysis? Identify and
define a financial ratio for each of the following categories: o
Liquidity Ratios o Leverage Ratios o Activity Ratios o
Profitability Ratios o Growth Ratios Which do you think is/are most
important to a company in making financial forecasts? Using
research, obtain information on the financial ratios for Walmart.
cite the resources apa,

3. Current assets. Define current assets without using the word
“asset.”
c. Explain what working capital is and how it is computed.
d. What are intangible assets?

QUESTION 6 Define the following terms
a. Current assets
b. Non current assets
c. Current liabilities
d. Non current liabilities
e. Share capital

CURRENT RATIO What is the formula? Current assets/current
liabilities pg 51
Calculate the ratio current year. Page________
7266/10132=.72
Calculate the ratio for the prior year. Page_______
8753/9501=.92
Analyze the ratio trend.
2. RETURN ON ASSETS
What is the formula? net income/avg total assets
Calculate the ratio current year. 10990/((120,232)=9.15%
Page_______19_
Calculate the ratio for the prior year. Page_______
3642/(120,480)=3.02%
Analyze the ratio trend.
3. RECEIVABLE TURNOVER RATIO What is the formula?Net credit
Sales/Average Account Receivable
Calculate the ratio current year....

How to find cash? and calculate total assets? ROA= NI/Total
assetsCategoryPrior yearCurrent yearAccounts payable41,40045,000Accounts receivable115,200122,400Accruals16,20013,500Additional paid in capital200,000216,660Cash??????Common Stock @ par value37,60042,000COGS131,400178,190.00Depreciation expense21,60022,533.00Interest expense16,20016,634.00Inventories111,600115,200Long-term debt135,000138,345.00Net fixed assets377,719.00399,600Notes payable59,40064,800Operating expenses (excl. depr.)50,40060,541.00Retained earnings122,400136,800Sales255,600337,945.00Taxes9,90018,616.00What is the current year's return on assets
(ROA)?Answer Format: Percentage Round to: 2 decimal places
(Example: 9.24%, % sign required. Will accept decimal format
rounded to 4 decimal places (ex: 0.0924))

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