Project #61002 - Financial Ratios

Recommend the appropriate financial ratio or ratios to use in each of the following scenarios, and explain the rationale underlying each choice: 1. Your company is engaged in a tight competition with rivals who are experiencing rapid increase in demand for their products as a result of offering rock-bottom prices; and you are trying to determine how much you can reduce your own prices in order to stay competitive. 2. Your company is considering expanding operations to a new geographical market. This will require an increased investment in inventory, advertising and support to retail outlets. Which financial ratio will help you determine the best approach to finance this move? 3. Your company finds itself in a situation where you over-estimated the demand for your product. Now you are in an ‘over-stocked’ situation. How critical is your dilemma? 4. Your company has an opportunity for a “quick win” by entering into a joint venture with a company that carries a product line closely related to yours. The combination of your company’s two products will create a unique combination that can potentially appeal to an entirely new market; but timing is critical, and will require a fairly major short term investment in both product development and inventory to gain a foothold in the new market. Are you in a good position to capitalize on this opportunity? See attached document for a summary of frequently used financial ratios and their purpose. /content/enforced/56589-000201-01-2152-GO3-9082/Summary of key financial ratios 2015-2-

Subject Business
Due By (Pacific Time) 03/06/2015 12:00 am
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