Short Questions:
1. The accounts receivable turnover ratio for the Ajax Manufacturing Company was determined to be 6. What does a turnover of 6 mean?
2. The inventory turnover ratio of the Ajax Manufacturing Company was determined to be 4. What does a turnover of 4 mean?
3. If a company has a current ratio of less than one, what kinds of problems are suggested by this extremely low ratio?
4. What financial problems are suggested by a high debt/equity ratio?
5. The management of the Ajax Manufacturing Company realizes it is over stocked in finished goods inventory. What ratio would reveal this fact?
6. The management of the Ajax Manufacturing Company realizes that it has a problem collecting accounts receivable. Customers for the most part are paying but typically they have been paying a month late. What ratio would reveal this fact?
7. The management of the Ajax Manufacturing Company is concerned that the market value of its stock has declined in the past several months. What ratios might indicate why this has happened?