MINDTAP Q Search th Ch. 3: HW2 The analysis that involves calaulating the growth
ID: 2815922 • Letter: M
Question
MINDTAP Q Search th Ch. 3: HW2 The analysis that involves calaulating the growth rates of all items from the balance sheet and income statement relative to a base year is called a O Common size balance sheet analysis O Common size income statement analysis O Percentage change analysis O Cash flow change analysis Suppose you of the financial performance of Green Caterpillar Garden Supplies Inc. over the past three years 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 strategies for better operations management. You have collected the company's relevant financial data, made reasonable assumptions based on the information available, and calculated the following ratios. Ratios Calculated Year 1 Year 2 Year 3 Price to cash flow 4.80 6.24 6.99 Inventory turnover 9.60 11.52 12.90 Debt to equity 0.40 0.42 0.50 Based on the preceding information, your calculations, and your assumptions, which of the following statements can be included in your analysis report? Check all that apply The company's creditworthiness has improved over these three years as evidenced by the increase in its debt-to-equity ratio over time Green Caterpillar Garden Supplies Inc.'s ability to meet its debt obligations has worsened since its debt-to-equity ratio increased from 0.40 to 0.50. An improvement in the inventory turnover ratio could likely be explained by the new sales-forecasting strategies that led to better inventory management The market value of Green Caterpillar Garden Supplies Inc.'s common shares declined over the three years. + GradedExplanation / Answer
1.
Percentage change analysis use for determining the growth rate of all the item from balance sheet and income statement relative to base year.
Option (C) is correct answer.
2.
in three years comapany does not issued new share and comapny is facing some operating defficulties. Debt to equity ratio of comapny increase from 0.40 to 0.50. it mean creditworthiness of company increased in these three years. Inventory turnover of company increases from 9.60 to 12.90 in three years. it mean inventory turnover of company has improved. Market value of share must be increase since, price to cash flow of company increases.
Option (A) and (C) is correct answer.
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