Financial Analysis
Discussion Questions
1. Which of the following types of firms do you expect to have particularly high or low asset turnover? Explain why.
Supermarket—
Pharmaceutical Company—
Jewelry Retailer—
Steel Company—
2. Which of the following types of firms do you expect to have high or low sales margins? Why?
Supermarket—
Pharmaceutical Company—
Jewelry Retailer—
Software Company—
3. James Broker, an analyst with an established brokerage firm, comments: “The critical number I look at for any company is operating cash flow. If cash flows are less than earnings, I consider a company to be a poor performer and a poor investment prospect.” Do you agree with this assessment? Why or why not?
4. In 2005 IBM had a return on equity of 26.7 percent, whereas Hewlett-Packard’s return was only 6.4 percent. Use the decomposed ROI framework to provide possible reasons for this difference based on the data below:
IBM HP
NOPAT/Sales 9.0% 2.7%
Sales/Net Assets 2.16 2.73
Effective After-Tax Interest Rate 2.4% 1.1%
Net Financial Leverage 0.42 -0.16
5.
ROE can be decomposed as follows:
5. Joe Investor asserts, “A company cannot grow faster than its sustainable growth rate.” True or false? Explain why.
6. What are the reasons for a firm having lower cash from operations than working capital from operations? What are the possible interpretations of these reasons?
7. ABC Company recognizes revenue at the point of shipment. Management decides to increase sales for the current quarter by filling all customer orders. Explain what impact this decision will have on the following:
Days’ receivable for the current quarter.
Days’ receivable for the next quarter.
Sales growth for the current quarter
Sales growth for the next quarter.
Return on sales for the current quarter.
Return on sales for the next quarter.
8. What ratios would you use to evaluate operating leverage for a firm?
9. What are the potential benchmarks that you could use to compare a company’s financial ratios? What are the pros and cons of these alternatives?
Comparison to Firm’s Prior History.
Comparison to Firm’s Expected or Budgeted Performance.
Comparison to Industry Average.
Comparison to Market.
10. In a period of rising prices, how would the following ratios be affected by the accounting decision to select LIFO, rather than FIFO, for inventory valuation?
Gross margin
Current ratio
Asset turnover
Debt-to-equity ratio
Average tax rate
TO ORDER FOR THIS QUESTION OR A SIMILAR ONE, CLICK THE ORDER NOW BUTTON AND ON THE ORDER FORM, FILL ALL THE REQUIRED DETAILS THEN TRACE THE DISCOUNT CODE,
TYPE IT ON THE DISCOUNT BOX AND CLICK ON ‘USE CODE’ TO EFFECT YOUR DISCOUNT. THANK YOU
Our Service Charter
-
Excellent Quality / 100% Plagiarism-Free
We employ a number of measures to ensure top quality essays. The papers go through a system of quality control prior to delivery. We run plagiarism checks on each paper to ensure that they will be 100% plagiarism-free. So, only clean copies hit customers’ emails. We also never resell the papers completed by our writers. So, once it is checked using a plagiarism checker, the paper will be unique. Speaking of the academic writing standards, we will stick to the assignment brief given by the customer and assign the perfect writer. By saying “the perfect writer” we mean the one having an academic degree in the customer’s study field and positive feedback from other customers. -
Free Revisions
We keep the quality bar of all papers high. But in case you need some extra brilliance to the paper, here’s what to do. First of all, you can choose a top writer. It means that we will assign an expert with a degree in your subject. And secondly, you can rely on our editing services. Our editors will revise your papers, checking whether or not they comply with high standards of academic writing. In addition, editing entails adjusting content if it’s off the topic, adding more sources, refining the language style, and making sure the referencing style is followed. -
Confidentiality / 100% No Disclosure
We make sure that clients’ personal data remains confidential and is not exploited for any purposes beyond those related to our services. We only ask you to provide us with the information that is required to produce the paper according to your writing needs. Please note that the payment info is protected as well. Feel free to refer to the support team for more information about our payment methods. The fact that you used our service is kept secret due to the advanced security standards. So, you can be sure that no one will find out that you got a paper from our writing service. -
Money Back Guarantee
If the writer doesn’t address all the questions on your assignment brief or the delivered paper appears to be off the topic, you can ask for a refund. Or, if it is applicable, you can opt in for free revision within 14-30 days, depending on your paper’s length. The revision or refund request should be sent within 14 days after delivery. The customer gets 100% money-back in case they haven't downloaded the paper. All approved refunds will be returned to the customer’s credit card or Bonus Balance in a form of store credit. Take a note that we will send an extra compensation if the customers goes with a store credit. -
24/7 Customer Support
We have a support team working 24/7 ready to give your issue concerning the order their immediate attention. If you have any questions about the ordering process, communication with the writer, payment options, feel free to join live chat. Be sure to get a fast response. They can also give you the exact price quote, taking into account the timing, desired academic level of the paper, and the number of pages.