XYZ Company Financial Ratio Analysis
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The following stakeholders are interested in XYZ Corporations financial results:
Big Bank, Inc. is a potential lender.
The employees' union is concerned about the progress of XYZ's management team.
XYZ's biggest customer, Big Biz. Inc., is considering purchasing a large block of stock.
Use the information provided to you in the balance sheet and income statement to analyze XYZ Corporation's profitability for the current and prior year.
Include the following profitability ratio calculations:
- current ratio
- acid-test ratio
- cash to debt ratio
- times interest earned
- cash to debt coverage
- book value per share
- receivable turnover
- inventory turnover
- asset turnover
- profit margin on sales
- rate of return on assets
- earnings per share (EPS)
- payout ratio
- profit margin on sales
- rate of return on common equity
- price to earnings (P/E) ratio
Once you have completed all of your calculations, take each XYZ stakeholder point of view. What ratios do you feel would be most important and relevant to that particular individual or group? Explain your rationale. How would each stakeholder view XYZ's performance?
Please use the attached template. Thanks
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Solution Summary
This solution provides a financial ratio analysis for XYZ Company.
Solution Preview
See file attached.
Big bank Inc a potential lender:
Long term creditors are bothered about the financial condition of the company, profit earned by the company. Retained earnings and reserves maintained by the company, proportion of debt and equity in the capital structure of the company. If the company is having already heavy debt, then it is not advisable to give long term debt to the organization. On the other hand, if the company is financially strong and equity portion is high in the capital structure of the organization, then creditors could decide to provide long term credit. Big Bank use total debt ratio, debt equity ratio, interest ...
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