Required: 1. Consider which ratios provide information about short-term liquidit
ID: 2485747 • Letter: R
Question
Required:
1. Consider which ratios provide information about short-term liquidity. Indicate whether Richardson's short-term liquidity is adequate? (yes/no)______________
2. Consider which ratios provide information about asset efficiency. Does Richardson uses its assets efficiently? (yes/no)______________
3. Consider which ratios provide information about long-term credit risk. Should long-term creditors regard Richardson as a high-risk or a low-risk firm. (high/low)______________
4. Perform a Dupont analysis for 2013 and 2012. Round your intermediate calculations and final answers to two decimal places.
Dupont Analysis 2013 %______________ 2012 %______________Explanation / Answer
Answer:1 Current ratio Provides information about short-term liquidity.
CR=CA/CL
2013=1640599/471876=3.48 times
2012=1404341/427993=3.28 times
Yes, Richardson's short-term liquidity is adequate.
Answer:2 Asset Turnover ratio provide information about asset efficiency.
Asset Turnover ratio=Average Net sales/Average Assets
2013=3877566.5/2058712
=1.88 times
2012=3415490.5/1804037
=1.89 times
No Richardson does not uses its assets efficiently.
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