venom
Sep 15, 2006, 09:48 AM
Can someone help me please with this question?
The lenders of X have asked you to prepare the following ratios for the company from their comparative financial statements. They are concerned about Soukup’s ability to continue as a going concern. The ratios are as follows:
Year 2003
Current ratio 2.1
Working capital Down 7%
Debt to total assets 0.70
Net income Down 8%
Earnings per share $1.15
Price-earnings ratio 19.5
Year2004
Current ratio 3.1
Working capital Up 22%
Debt to total assets 0.60
Net income Up 32%
Earnings per share $2.40
Price-earnings ratio 26.2
Defend the company’s argument that its financial health is improving by citing the implications and limitations of each ratio listed.
The lenders of X have asked you to prepare the following ratios for the company from their comparative financial statements. They are concerned about Soukup’s ability to continue as a going concern. The ratios are as follows:
Year 2003
Current ratio 2.1
Working capital Down 7%
Debt to total assets 0.70
Net income Down 8%
Earnings per share $1.15
Price-earnings ratio 19.5
Year2004
Current ratio 3.1
Working capital Up 22%
Debt to total assets 0.60
Net income Up 32%
Earnings per share $2.40
Price-earnings ratio 26.2
Defend the company’s argument that its financial health is improving by citing the implications and limitations of each ratio listed.