Financial pressures from attempting to grow too rapidly


Question: A firm faces financial pressures from attempting to grow too rapidly. Which of the following ratios would you expect to be impacted the most by these pressures? Why?

  • Current ratio
  • Quick ratio
  • Inventory turnover ratio
  • Days sales outstanding
  • Fixed assets turnover ratio
  • Total assets turnover ratio
  • Debt ratio
  • Times-interest-earned ratio
  • EBITDA coverage ratio
  • Profit margin on sales
  • Basic earning power
  • Return on total assets (ROA)
  • Return on common equity (ROE)
  • Price/earnings ratio
  • Price/cash flow ratio
  • Market/book ratio

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Finance Basics: Financial pressures from attempting to grow too rapidly
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