This preview shows page 1. Sign up to view the full content.
Unformatted text preview: 0.00 ÷ $88,400.00 = 1.17 Normally a current ratio this low would signal cash flow problems, but
since the current portion of the note payable of $25,000 is not due
until December 31st of 20x0 and the amount in inventory is not very
high, this company will be able to meet its current obligations.
ROA $39,200.00 ÷
$39,200.00 ÷ (($226,000 + $238,000)/2)
0.1689655 = 16.90% Management is earning 16.90% on the assets in which they have invested.
To determine whether is rate is good or is too low, we would need to
compare it to the ROAs of other companies in this industry(ies).
ROE $39,200.00 ÷
$39,200.00 ÷ (($76,000 + $99,600)/2)
0.4464692 = 44.65% An ROE of 44.65% is superb!! There are not many investments that have
a return this high. Management is doing a great job with th...
View Full Document
- Fall '14