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Chapter 4 HW - Chapter 4 HW a Ratios happened to be...

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Chapter 4 HW a. Ratios happened to be standardized numbers that help in comparing a company’s performance to the overall market, pinpointing the weaknesses and strength sectors; The Five Major Catergories are: 1. Liquidity 2. Asset Management 3. Debt Management 4. Profitability 5. Market Value b. Projected Current Ratio for 2008: CA/CL = 2,680/1,040 = 2.58x Projected Quick Ratio for 2008: (CA – inv) / CL = (2,680 – 1,760) / 1,040 = .93x The quick ratio and current ratio are below the industry average, and their liquidity ratio is weak. However, both are steadily increasing – hopefully in the near future they will be sustainable and above the average. These values would be of greater benefit to each analyst at different values. Investors seek a highly liquid stock so its easily transferable to cash. A corporate manager uses debt to leverage investment positions and control the proper amount of assets for sale. Finally, bankers want to see sufficient ability for one to repay loans and notes issued by banks – this sometimes results in placing leans on inventory or assets.
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