Question

In: Finance

Ricardo Rocks (RR) is a public listed manufacturing company and we can calculate financial ratios from...

Ricardo Rocks (RR) is a public listed manufacturing company and we can calculate financial ratios from its financial statements.

What financial ratio(s) would you analyze and why, if you are:

  1. A supplier that requires payment of amount due in 2 weeks and looking to extend

    credits to RR

  2. A new investor interested to invest in RR

  3. A banker looking to extend a long-term loan to finance RR for a new investment

    project.

Please provide a clear explaination

Solutions

Expert Solution

1. If I am a supplier that is required payment of amount in two weeks and looking to extend credit.

A. I will be looking for quick ratio in order to determine the liquidity.

B.I will also be looking for current ratio in order to determine the total current assets and current liabilities.

C. I will also be looking for the interest coverage ratio.

2. If I am potential investor then-

A. I would be looking for the cash flow ratio of the company like free cash flows to the firm

B. I will be looking for Earning to EBITDA ratio

C.I will be looking for price to earning ratio in order to find the share is currently overvalued undervalued

D.I will also be looking for the solvency ratios if I am investing for the longer period of time in their stocks

3. If I am a banker who is looking to extend credit then-

A. I would be looking for the interest coverage ratio of the company

B.l would be looking for the debt equity ratio of the company in order to find out the solvency of the company

C. I will also be looking to find out free cash flow generating capacity of firm.

D. I will also be finding out the liquidity ratios of the company.

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

Ricardo Rocks (RR) is a public listed manufacturing company and we can calculate financial ratios from...
Ricardo Rocks (RR) is a public listed manufacturing company and we can calculate financial ratios from its financial statements. What financial ratio(s) would you analyze and why, if you are: 1. A supplier that requires payment of amount due in 2 weeks and looking to extend credits to RR 2. A new investor interested to invest in RR 3. A banker looking to extend a long-term loan to finance RR for a new investment project Please explain in your own...
Ricardo Rocks (RR) is a public listed manufacturing company and we can calculate financial ratios from...
Ricardo Rocks (RR) is a public listed manufacturing company and we can calculate financial ratios from its financial statements. What financial ratio(s) would you analyze and why, if you are: A supplier that requires payment of amount due in 2 weeks and looking to extend credits to RR A new investor interested to invest in RR A banker looking to extend a long-term loan to finance RR for a new investment project Please explain in your own words.
Question 8: Ricardo Rocks (RR) is a public listed manufacturing company and we can calculate financial...
Question 8: Ricardo Rocks (RR) is a public listed manufacturing company and we can calculate financial ratios from its financial statements. What financial ratio(s) would you analyze and why, if you are: 1. A supplier that requires payment of amount due in 2 weeks and looking to extend credits to RR 2. A new investor interested to invest in RR 3. A banker looking to extend a long-term loan to finance RR for a new investment project
Calculate for Movit Manufacturing in Problem 1 the financial ratios listed in the table below. Using...
Calculate for Movit Manufacturing in Problem 1 the financial ratios listed in the table below. Using these ratios and those provided for 2014 and 2015, conduct a short analysis of Movit’s financial health. Movit's Financial Ratios 2015 2014 Current Ratio 1.90 1.60 Acid test 0.90 0.75 Equity Ratio 0.40 0.55 Inventory Turns 7.00 12.00 Return on Assets Ratio 8% 10% Return on Equity Ratio 20% 18%
Calculate the following ratios and provide an analysis of the company based on the ratios from...
Calculate the following ratios and provide an analysis of the company based on the ratios from the financial statements provided. Days Sales Outstanding - answer Profit Margin - answer Asset Turnover - answer Return on Assets - answer Financial Leverage - answer Return on Equity - answer PPE Turnover - answer Total Liabilities to Equity - answer Times Interest Earned - answer SILVER CLOUD COMPUTING Income Statements For the Years Ended February 28, 2018 and 2017 fye 2/28/2018 fye 2/28/2017...
Calculate eight ratios ( min. one from every category) from the financial statements of any company...
Calculate eight ratios ( min. one from every category) from the financial statements of any company for last two years and give interpretation. (Note: Upload images of the financial statements of a company with solution)
Conglomerate public limited company is a listed company that operates in the building and manufacturing industries....
Conglomerate public limited company is a listed company that operates in the building and manufacturing industries. During the last Annual General Meeting (AGM), the company passed an ordinary resolution to remove its external auditors for non-performance and impairment of independence and objectivity. At the same AGM, the shareholders of Conglomerate public limited appointed your firm (Raven & Co) as its next auditors after a competitive tendering process. Required: a. As the audit engagement partner of Raven & Co, draft a...
it is often said that anyone with a pencil can calculate financial ratios,but it takes a...
it is often said that anyone with a pencil can calculate financial ratios,but it takes a brain to interpret them. what kind of things should the analyst keep in mind when evaluating the financial statements of a given firm ?
Introduction to Ratios The ratios we discuss and the ways that we calculate them are typical...
Introduction to Ratios The ratios we discuss and the ways that we calculate them are typical of the way companies or analysts may use ratios to analyze a business but they are not necessarily “the correct way” and other ratios and methods are not necessarily incorrect. The key things that you want to do when you use ratios are to try to use amounts that can give an insight into the business (such as EBIT per square foot, as we...
The following trial balance was prepared from the ledger accounts of Ricardo Company: RICARDO COMPANY Trial...
The following trial balance was prepared from the ledger accounts of Ricardo Company: RICARDO COMPANY Trial Balance April 30, Year 1 Account Titles Debit Credit Cash $ 78,400 Accounts receivable 49,000 Supplies 3,700 Prepaid insurance 5,500 Land $ 10,000 Accounts payable 11,500 Common stock 100,000 Retained earnings 34,255 Dividends 9,900 Service revenue 93,000 Rent expense 11,500 Salaries expense 35,300 Operating expense 36,200 Totals $ 229,500 $ 248,755 When the trial balance failed to balance, the accountant reviewed the records and...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT