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Unformatted text preview: books far below its replacement value. 8. If a firms return on equity is substantially higher than the firms return on assets, the analyst will know that the firms assets are financed by debt. 9. These ratios can be related in the fact that a faster turnover creates a more rapid movement of cash through the company and improves liquidity. 10. Yes, because utility companies have stable sales and earnings whereas auto and airlines do not. 11. Because fixed-charge coverage is more conservative than interest earned. 12. A high payout ratio tells the analyst that the stockholder is receiving a large part of the earnings and that the company is not retaining much income for investment in new plant and equipment. 13. I dont know....
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- Fall '09