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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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Answer:

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Explanation:

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2 years ago
I'LL GIVE BRAINLIST!!!! AND 50 POINTS!!!!
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8 0
3 years ago
Read 2 more answers
Break-Even Sales and Sales to Realize Operating Income For the current year ending December 31, McAdams Industries expects fixed
Ymorist [56]

Answer:

a.

Break even sales in units = 93000 Units

b.

Sales in units required for Target Income = 118000 units

Explanation:

a. Anticipated Break even sales in units

The break even in units is the number of units that a business must sell in order to for its total revenue to be equal to total costs and for it to break even. The break even in units is calculated as follows,

Break even in units = Fixed Costs / Contribution margin per unit

Where,

Contribution margin per unit = Selling price per unit - Variable cost per unit

Break even sales in units = 1860000 / (125 - 105)

Break even sales in units = 93000 Units

b. Operating income

To calculate the number of units required to earn a certain income or profit, we simply use the break even equation and add the income or profit amount required in the fixed cost. Thus the sales in units required to earn an operating income of $500000 is,

Sales in units required for Target Income = (1860000 + 500000) / (125 - 105)

Sales in units required for Target Income = 118000 units

3 0
2 years ago
May 23 Cash 22,000 Common Stock 22,000 This journal entry will
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The Journal entry will Increase cash and as well Increase Common stock

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3 years ago
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trasher [3.6K]

Answer:

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Identification: External user

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Identification: External user

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Identification: External user

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Part B

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Identification: Internal user

6. Which firm reports the highest sales and income?

Identification: External user

7. What are the costs of our productâs ingredients?

Identification: Internal user

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3 years ago
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