BA350 Week 2 Assignment A+ Promised

Feb 3rd, 2012
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BA350 Week 2 Assignment A+ Promised

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Week 2 Chapter 3 Questions: 3-3, 3-5, 3-6(3-3)The first thing is that this company has a decrease in asset turnover and an increase in its current ratio, it appears the company assets have increased. Another reflection of change would be that the cash, sales, and equitant, DSO and fixed assets turnover ratio have remained the constant it must mean that the company has more inventory.(3-5)a. Cash, receivables, and inventories, as well as current liabilities, vary over the year for firms with seasonal sales patterns. Therefore, those ratios that examine balance sheet figures will vary unless averages (monthly ones are best) are used.b. Common equity is determined at a point in time, say December 31, 2005. Profits are earned over time, say during 2005. If a firm is growing rapidly, year-end equity will be much larger than beginning-of-year equity, so the calculated rate of return on equity will be different depending on whether end-of-year, beginning-of-year, or average common equity is used as the denominator. Average common equity is conceptually the best figure to use. In public utility rate cases, people are reported to have deliberately used end-of-year or beginning-of-y

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