Professional Documents
Culture Documents
Question :
Answers:
a. There are four companies in very different industries. The operating characteri
stics of firms across different industries vary considerably, resulting in very di
fferent ratios.
b. The explanation for the lower current and strong ratios is possibly that the two
sectors are primarily cash-based. Their balance of reeiveables will be much
smaller than those of the other two companies.
c. High debt levels can be maintained if the firm's cash flow is large, predictable,
and steady. Those cash flow requirements tend to be met by utilities. The
software firm's cash flow will be very unpredictable and changeable. The
software industry faces greater competition, leading to more volatile cash
flow.
d. Although the software industry has potentially high profits and performance
on investment returns, it also has a great deal of uncertainty associated with
the profits. Also, the benefits of reduced risk associated with diversification
are lost by putting all of the money in one stock.
Question :
Answers:
a)
b)
= 35,5 Days
(Companies 35 days normal gathering period is not
useful for companies having 30 days credit term)
Question :
Answers:
Question :
Question :
Answers: