Answer each question with 75word count. Cite reference for each question
1. What are the two line items you need to calculate the current ratio? What information can you determine about the company with the current ratio?
2. For the Inventory Turnover ratio, you take the Cost of Goods Sold (COGS) from the income statement and divide it by Inventories on the balance sheet. Of course, Inventories is an asset on the balance sheet. What is the primary benefit of using an Inventory Turnover ratio? What would be considered a good (or bad) Inventory Turnover ratio?
3. Like liquidity ratio, profitability ratio is a category of ratios. As you pointed out there are several different profitability ratios. One profitability ratio is the Operating Profit Margin. The Operating Profit Margin works only in the income statement. Simply divide the Operating Income by the Revenue. Why is the Operating Profit Margin important? What other ratios can we use to measure profit?
4. How is Net Profit Margin different than Operating Profit Margin?
5. There are a number of factors that will affect future value. Fortunately, there's a formula for that: FV = PV * (1+i)^nIf you invested $50,000 today (PV), with a 5% interest rate (i), for 7 years (n), what would be the future value (FV) of that investment?In what situations might you use FV in a health care setting?