Project #105614 - financial statements and ratios

the book of this course is intermediate financial management by Brigham and Daves. I have to answer the 9 questions.

 

Type up and bring in answers to the following after studying Ch 6 and reading Ch 7. Do i-iv              for Tuesday (Jan 26) and the rest for Thursday (Jan 28).

                  i. Firm A had Net Income of $4 million in 2015 while Firm B had Net Income of $2 million for the                  same      year.  Provide at least three explanations for why Firm B might actually have performed           better than          Firm A in 2015 despite its lower Net Income.

                  ii. Suppose a firm switches from LIFO to FIFO during a period of rising inventory prices. Explain which       balance statement, income statement, and statement of retained earnings items will be        impacted by        this switch and why.

                  iii. When assessing a firm’s liquidity why should we not just use the working capital amount instead of   the current ratio?

                  iv. A firm’s current ratio has risen from 2 in 2014 to 3 in 2015. Why does this not automatically mean     that the firm is carrying more current assets? List all the possible reasons for this rise.

                  v. A firm switches to JIT manufacturing. How would this impact its inventory turnover (defined as               COGS/Inventory)?

                  vi. A firm has an average collection period of 36 days. Is this performing well in terms  if its             collections on receivables? Discuss.

                  vii. A firm has a gross profit margin of 0.30 and a net profit margin of 0.05 for 2015. What can you say   about the level of this firm’s COGS relative to sales? What does the 0.25 gap represent in this scenario?

                  viii. A firm’s net income margin has shrunk over 2014-2015 while its gross profit margin has stayed          constant over this period. What does this tell you about how the firm’s income statement items have           changed over this period?

                  ix. A firm is considering applying for a long-term loan. It has a times interest earned ratio of 3.2                   and a     cash-flow to long-term debt ratio of 0.88. How concerned should the lender be, given           these numbers.                    What other considerations should come to bear?

Subject Business
Due By (Pacific Time) 01/28/2016 02:00 pm
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