1. What three factors would influence your evaluation as to whether a company's current ratio is good or bad, why?
2. Suggest several reasons why a 2:1 current ratio might not be adequate for a particular company.
3. Why is working capital given special attention in the process of analyzing balance sheets?
4. What does the number of days' sales uncollected indicate and who would be interested in these ration?
5. What does a relatively high accounts receivable turnover indicate about a company's short-term liquidity?
6. Why is a company's capital structure, as measured by debt and equity ratios, important to financial statement analysts?
7. How does inventory turnover provide information about a company's short-term liquidity?
8. Discuss why there may or may not be ratios that would be more important in a service vs manufacturing environment and which rations would those be?
Please provide a brief explanation of how this information is important in managerial decision making.