BUS-FP3061 – Fundamentals of Accounting
Question # 00353762
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Updated on: 08/05/2016 02:10 AM Due on: 08/05/2016
BUS-FP3061 –Fundamentals of Accounting
|
Ratio |
Year 1 |
Year 2 |
|
Current ratio |
3.12:1 |
2.96:1 |
|
Quick ratio |
1.34:1 |
1.02:1 |
|
Receivables turnover |
9.7 times |
10.2 times |
|
Inventory turnover |
2.4 times |
2.3 times |
|
Profit margin |
11.4% |
12.6% |
|
Asset turnover |
1.21 times |
1.22 times |
|
Return on assets |
13.7% |
15.4% |
|
Return on equity |
28.5% |
29.3% |
|
Price-earnings ratio |
10.4 times |
12.4 times |
|
Debt ratio |
50.2% |
45.3% |
|
Times interest earned |
9.6 times |
13.0 times |
What does the calculation of each ratio represent?
How does year one compare with year two, and what trend can be seen when you compare the two years?
Is the trend from year one to year two positive or negative?
What are the possible reasons for the trend?
What recommendations do you have for turning a negative trend into a positive trend?
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Solution: BUS-FP3061 – Fundamentals of Accounting