8. Analyzing ratios One of the most important applikations of ratio analysis is

Question

8. Analyzing ratios One of the most important applikations of ratio analysis is to compare a company's performance with that of other players in the Industry or to compare its own performance over a period of time Such analyses are referred to as a comparative analysils and trend analyais, respectiuly A common size analysis requires the representation of financial statemnt data relative to asingle financial statement item (or base account or value) What is the most commonly used base item for a common size balance sheet? O Total assets O Net sales O Eamings bafore interest and taxe O Nat income Suppose you ??? conducting an analysis of the financial performance of Fuzzy Bitton Clothing Company over the past t The company did not issue new shares during these three years, and has faced some operational difficulties The company has thus pilot tested some new forecasting stretegies for better operations managemant you colected the company's relevant financial data, made rensonable msumptions based on the f ovañable, and calculated the following ratios Ratios calcutated Year 1 Year 2 Year 3 price to cash fow5.20676757 Inventory twnover Lo 40 12 48 1398 Gased on the preceding information, your cariculations and you be included in your analysis reporta check all that apply mptions wihich of the foilowing statements can D ruzzy tuton Cothing compenys aolty to eet its ou obligations has wonened since ts deot-torequily ratio inceased from ??? tooso, C The comeany's creditworthiness hes improved over thse thrs as evideed by the incresase in its C The market value of Fuzzy button clething companys cmmon an dth ea stretegjes thac ed to betber inventory maragemen

Explanation / Answer

1) The most commonly used base item for a common size balance sheet is A) Total Assets

2) Two statements can be included in the analysis:

A) Fuzzy Button Clothing Company's ability to meet its debt obligations has worsened since its debt-to-equity ratio increased from 0.40 to 0.50

D) An improvement in the inventory turnover ratio could likely be explained by the new sales-forecasting strategies that led to better inventory management.

Related Questions

Navigate

• Browse (All)
• Browse 8
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.