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OLEGan [10]
3 years ago
11

Your financial analyst calculated the following ratios for three companies: Boeing Microsoft PG&E Cash ratio 0.15 0.1 0.1 Cu

rrent ratio 1.3 2.5 0.8 Debt ratio 0.9 0.4 0.75 Profit margin 5% 28% 6% Evaluate the statement "Boeing is a riskier company than Microsoft and PG&E because of its higher debt ratio." Yes: A higher debt ratio of Boeing than that of PG&E is a sign of short-term illiquidity. Not necessarily: The debt ratios are not directly comparable, since each company is in a different industry. Yes: A higher debt ratio means that the company is less capable of paying interests.
Business
1 answer:
MaRussiya [10]3 years ago
7 0

Answer: Not necessarily: The debt ratios are not directly comparable, since each company is in a different industry.

Explanation:

We cannot authoritatively state that even though Boeing has such a high debt rate, that it is a riskier company than either Microsoft or PG&E. This is due to the drawback in ratio analysis of bias if compared across different industries.

Ratio analysis best works when comparing companies in the same industry because their situations will be similar. Comparing across industries can be misleading because different industries operate in different ways. In the Airplane manufacturing business for instance, having a high amount of debt due to having the tangible assets to back it up might be a normal thing.

The debt ratios are therefore not directly comparable because each company is in a different industry.

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Isaac holds one ton of perishable fruit in storage for Juice Smoothies Corporation. Juice Smoothies does not pay for the storage
FrozenT [24]

Answer:

The correct answer is option b.

Explanation:

Here, when the Juice smoothies does not pay Issac, the selling of fruits is an example of mitigation of damages.

Mitigation of damages can be referred as a contract law under which a victim of breach of law can take actions in order to minimize damages. It means to take any reasonable opportunity possible under the given circumstances to minimize or reduce damages. Though taking extreme actions is not required.

7 0
3 years ago
REI has a 100% satisfaction guarantee on its items. It allows customers to return products up to one year after purchase. This i
Vanyuwa [196]

Answer: risk

Explanation: 100% satisfaction guarantee is a statement that if a customer of a product (or service) is not satisfied with the item purchased, then the producer will offer a full refund back to the customer. In this case REI allows this option for a period of up to 1 year after the sale was made.

REI utilises this option in an effort to reduce costs attributed to risk. For customers, this is a powerful tool as they are allowed to try the product, while knowing that if they don't like it then they can return it for a full refund. For REI, it increases customer trust as it allows customers to believe that the product is worth the sales price. It also reduces risk as REI is able to test the product out to actual customers and get a feel for if they like it, and what can be improved if needed.

3 0
3 years ago
Merticao, a French textile company, supplied most of its products to its primary market in Hestonia, a North American nation. Ho
Paraphin [41]

Answer:

reduce risk

Explanation:

In the case when hestonis faced an economic downturn so here the expenditures are to be decreased also merticao starts for focusing more on the domestic market so here the loss should be survived due to decreased the risk in teh global trade in the primary market

Hence, the above term should be fit to the given situation

3 0
3 years ago
Cole Co. began constructing a building for its own use in January 2016. During 2016, Cole incurred interest of $50,000 on specif
Stella [2.4K]

Answer:

$40,000

Explanation:

The accounting procedure involved in the above is that one picks the lower between the actual interest incurred and the interest computed on the weighted average amount of accumulated expenditures for PPE.

The actual interest incurred on specific construction debt and other borrowings

= $50,000 + $20,000

= $70,000

Since the interest computed on the weighted average amount of accumulated expenditure for the building is $40,000 , the lower between the actual interest incurred and interest on weighted average amount of accumulated expenditure is $40,000, hence will be the capitalized amount.

4 0
3 years ago
What is the cost when someone borrows money from someone else?.
PSYCHO15rus [73]

The cost when someone borrows money from someone else is known as interest.

<h3>What is interest?</h3>

Interest rate is the cost of borrowing. It is the amount the borrower pays the lender for use of their funds. It is usually a function of the amount borrowed, length of the loan and the interest rate.

For example, if a person borrows $1000 for 1 year at an interest rate of 10, the interest that would be paid is: $1000 x 0.1 = $100.

To learn more about interest rate, please check: brainly.com/question/14935026

8 0
2 years ago
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