Risk Ratios
Q: Compare and contrast dollar returns and rates of return.
A: The returns from any investment can be calculated in terms of value (amount terms) or percentages.
Q: _______ is a measure of risk while _______ is a measure of risk and liquidity.
A: Capital budgeting is the process of distributing the resources(finance) of the organization in…
Q: Define market risk
A: Market risk is the risk of an investment due to over all volatility in the market returns due to…
Q: Define cash flow hedges.
A: Derivatives: Derivative is a product whose value is derived from underlying assets called base.…
Q: Explain price/cash flow ratio
A: Answer: Price to cash flow is determined through the division of price per share by cash flow per…
Q: Liquid ratio formula?
A: Ratio analysis is referred as the quantitative method of understanding company’s liquidity,…
Q: Define Liquidity Analysis?
A: Liquidity analysis is very essential as it shows the ability of the firm in paying short-term bills.…
Q: Define volatility value.
A: Volatility is a rate at which the cost of a security increments or diminishes for a specified set of…
Q: Explain the importance of financial ratio.
A: Financial ratio is referred to as the relative magnitude of the 2 chosen numerical values, which…
Q: Define Risk Premium
A: It is defined as the distinction between the expected return for a portfolio or an investment and…
Q: which of the following headings best describes and measures gearing : a- financial position (risk)…
A: Gearing ratio is a financial ratio which compares equity of a company to its debt. Gearing ratio =…
Q: beta value on risk-return ratio
A: The risk-return ratio measures the return in terms of risk for a specified period of time. The…
Q: What is risks and interest rate
A: Risks and interest rate are tied together in case of fixed income instruments like bonds.
Q: What is liquidity ratio?
A: Liquidity ratio is very essential as it shows the ability of the firm in paying short-term bills.…
Q: Basic Elements of Risk-Adjusted Returns?
A: Introduction: Risk adjusted return is a methodology for calculating and evaluating the returns on an…
Q: What do the Liquidity ratios show?
A: Ratio analysis: The analysis of a company using the financial ratios and comparing its trends and…
Q: Internal rate of return
A: Internal rate of return- It is the rate of discount at which the sum of discounted cash inflows…
Q: a) What is the general characteristics of Risk Financing – Risk Retention Methods
A: Hi, Thanks for the Question, Since you asked multiple questions, we will answer first question for…
Q: What information would be required to compute the risk-asset ratio under Basle I?
A: The risk asset ratio (RAR) measures the amount of a bank's total regulatory capital in relation to…
Q: define volatility
A: Volatility is a rate at which the cost of a security increments or diminishes for a specified set of…
Q: the current market risk
A: Cost of capital for security BBB = 6% Cost of capital for security AAA = 16% Beta of security BBB…
Q: What is definitions of this? Systematic risk Risk free rate of return Market rate of…
A: Capital asset pricing model (CAPM) can be used to compute the return expected by the investors by…
Q: What is the difference between solvency ratio and liquidity ratio?
A: The quantitative technique that helps in the measurement of the liquidity, profitability, solvency…
Q: What value does the PEG ratio provide to financial analysts?
A: The price-to-earnings ratio of a stock is divided by the growth rate of its earnings over a given…
Q: Define target payout ratio
A: SOLUTION:- A target payout ratio is a degree of the proportion of a company's profits it would want…
Q: What is forecasted financial statements (FFS) method?
A: forecasted financial statements (FFS) method is a corporate financial strategy. Financial forecasts…
Q: Explain the risk-return trade-off for liquid assets.
A: Risk return trade off tell relationship between the risk and return.
Q: Give some examples of the market-value ratios?
A: Market value ratios may include various types of ratios which indicate the value of company’s share.…
Q: Describe relationship between risk and profitability.
A: Risk and profitability have direct relation. Lower the risk, lower is the return and Higher the…
Q: facilitates the comparison of financial noriod t moth
A: Option a is wrong because historical cost concept suggests to record of assets and liabilities at…
Q: What is the risk in the context of financial decision making and performance?
A: Financial decision making: Financial decision making denotes to decision making concerning financial…
Q: Define liquidity ratios.
A: Liquidity Ratios: The term Liquidity refers to the ability of the company to meet its current…
Q: asset turnover ratio?
A: Asset turnover ratio = Sales/((Total assets at the beginning of the year + Total assets at the end…
Q: How does measure liquidity?
A: The transactions of the company will be analyzed by the management, and it will be recorded in…
Q: Define market portfolio
A: A pool of investments that comprises of all the available investment opportunities across the globe…
Q: Explain risk premium
A: An investor investing in a risky asset would demand a greater interest rate to compensate for the…
Q: P/E Ratios and Bubbles?
A: Price Earning ratio shows the relationship between price of the company's share with Earning per…
Q: how to calculate FLEV and Spread and Noncontorlling interest ratio
A: Financial Leverage is a financial ratio that represents the relationship between the total debt and…
Q: Critically discuss the application of EWMA, GARCH and asymmetric GARCH models to volatility…
A: Volatility should be forecastable using a volatility model. Almost all financial applications of…
Q: Define Financial leverage.
A: Leverage: Leverage measures overlook the mixture of debt and equity which is required for analyzing…
Q: finance?
A: Business is an activity carried out with the aim of earning profits. The main objective behind…
Q: escribes the relationship between risk and return.
A: Risk and return are directly related.
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- Ratio Analysis Rising Stars Academy provided the following information on its 2019 balance sheet and state mcnt of cash flows: Long-term debt S 4,400 Interest expense S 398 Total liabilities 8,972 Net income 559 Total assets 38,775 Interest payments 432 Total equity 29,803 Cash flows from operations 1.015 Operating income 1.223 Income tax expenses 266 Income taxes paid 150 Required: Calculate the following ratios for Rising Stars: (a) debt to equity, (b) debt to total assets, (c) long-term debt to equity, (d) times interest earned (accrual basis), and (e) times interest earned (cash basis). (Note: Round answers to three decimal places.) CONCEPTUAL CONNECTION Interpret these results. 3.What does it mean if a bond is callableThe 2021 income statement of Adrian Express reports sales of $22,710,000, cost of goods sold of $13,100,000, and net income of $2,380,000. Balance sheet information is provided in the following table. ADRIAN EXPRESSBalance SheetsDecember 31, 2021 and 2020 2021 2020 Assets Current assets: Cash $ 1,040,000 $ 1,030,000 Accounts receivable 2,025,000 1,355,000 Inventory 2,595,000 1,925,000 Long-term assets 5,240,000 4,510,000 Total assets $ 10,900,000 $ 8,820,000 Liabilities and Stockholders' Equity Current liabilities $ 2,294,000 $ 1,964,000 Long-term liabilities 2,706,000 2,704,000 Common stock 2,325,000 2,155,000 Retained earnings 3,575,000 1,997,000 Total liabilities and stockholders' equity $ 10,900,000 $ 8,820,000 Industry averages for the following profitability ratios are as follows:…The 2021 income statement of Adrian Express reports sales of $22,710,000, cost of goods sold of $13,100,000, and net income of $2,380,000. Balance sheet information is provided in the following table. ADRIAN EXPRESSBalance SheetsDecember 31, 2021 and 2020 2021 2020 Assets Current assets: Cash $ 1,040,000 $ 1,030,000 Accounts receivable 2,025,000 1,355,000 Inventory 2,595,000 1,925,000 Long-term assets 5,240,000 4,510,000 Total assets $ 10,900,000 $ 8,820,000 Liabilities and Stockholders' Equity Current liabilities $ 2,294,000 $ 1,964,000 Long-term liabilities 2,706,000 2,704,000 Common stock 2,325,000 2,155,000 Retained earnings 3,575,000 1,997,000 Total liabilities and stockholders' equity $ 10,900,000 $ 8,820,000 Industry averages for the following profitability ratios are as follows:…
- The 2021 income statement of Adrian Express reports sales of $14,097,000, cost of goods sold of $8,154,000, and net income of $1,540,000. Balance sheet information is provided in the following table. ADRIAN EXPRESSBalance SheetsDecember 31, 2021 and 2020 2021 2020 Assets Current assets: Cash $ 540,000 $ 700,000 Accounts receivable 1,280,000 940,000 Inventory 1,680,000 1,340,000 Long-term assets 4,740,000 4,180,000 Total assets $ 8,240,000 $ 7,160,000 Liabilities and Stockholders' Equity Current liabilities $ 1,960,000 $ 1,600,000 Long-term liabilities 2,240,000 2,340,000 Common stock 1,880,000 1,880,000 Retained earnings 2,160,000 1,340,000 Total liabilities and stockholders' equity $ 8,240,000 $ 7,160,000 Industry averages for the following four risk ratios are as follows:…The comparative statement of financial position and statement of comprehensive income of Keriboom on December 31, 2021 are shown below: Keriboom Statement of Financial Position As of December 31, 2021 ASSETS 2021 2020 Cash and cash equivalents 440,000 200,000 Trade and other receivables 130,000 120,000 Inventory 120,000 480,000 Prepaid assets 40,000 160,000 Total current assets 730,000 960,000 Property, plant & equipment 760,000 440,000 Total noncurrent assets 760,000 440,000 TOTAL ASSETS 1,490,000 1,400,000 LIABILITIES Trade and other payables 620,000 560,000 EQUITY Owner’s capital 870,000 840,000 TOTAL LIABILITIES & EQUITY 1,490,000 1,400,000 Entity A Statement of Comprehensive Income For the year ended December 31, 2021 Sales 1,000,000…Suppose the following financial data were reported by 3M Company for 2019 and 2020 (dollars in millions). 3M CompanyBalance Sheets (partial) 2020 2019Current assets Cash and cash equivalents $3,180 $1,836Accounts receivable, net 3,600 3,180Inventories 2,738 3,019Other current assets 1,932 1,590Total current assets $11,450 $9,625Current liabilities $4,830 $5,887 Calculate the current ratio and working capital for 3M for 2019 and 2020. (Round current ratio to 2 decimal places, e.g. 1.25 : 1. Enter working capital answers to million.) Current ratio 2019 :12020 :1 Working capital 2019 $ million2020 $ million Link to Text
- Suppose the following financial data were reported by 3M Company for 2019 and 2020 (dollars in millions). 3M CompanyBalance Sheets (partial) 2020 2019Current assets Cash and cash equivalents $3,200 $1,845Accounts receivable, net 3,450 3,180Inventories 2,639 3,042Other current assets 1,872 1,549Total current assets $11,161 $9,616Current liabilities $4,853 $5,893 (a)Calculate the current ratio and working capital for 3M for 2019 and 2020. (Round current ratio to 2 decimal places, e.g. 1.25 : 1. Enter working capital answers to million.) Current ratio 2019 :12020 :1 Working capital 2019 $ million2020 $ million (b)The parts of this question must be completed in order. This part will be available when you complete the part above.The 2021 Income statement of Adrian Express reports sales of $16,932,000, cost of goods sold of $10,363,500, and net income of $1,630,000. Balance sheet information is provided in the following table. ADRIAN EXPRESS Balance Sheets December 31, 2021 and 2020 2021 2020 Assets Current assets: $ 630,000 $ 790,000 Cash Accounts receivable Inventory 1,460,000 1,860,000 4,830,000 $8,780,000 $7,520,000 1,030,000 1,430,000 4, 270,000 Long-term assets Total assets Liabilities and Stockholders' Equity Current liabilities Long-term liabilities $1,990,000 $1,690,000 2,330,000 1,970,000 2,490,000 2,430,000 1,970, 000 1,430,000 Common stock Retained earnings Total liabilities and stockholders' equity $8,780,000 $7,520,000 Industry averages for the following four risk ratios are as follows: Average collection period Average days in inventory Current ratio Debt to equity ratio 25 days 60 days 2 to 1 50% Requlred: 1. Calculate the four risk ratios listed above for Adrian Express in 2021. (Use 365 days…Suppose the following financial data were reported by 3M Company for 2019 and 2020 (dollars in millions). 3M CompanyBalance Sheets (partial) 2020 2019 Current assets Cash and cash equivalents $3,040 $1,908 Accounts receivable, net 3,370 3,180 Inventories 2,774 3,016 Other current assets 1,956 1,628 Total current assets $11,140 $9,732 Current liabilities $4,882 $5,875 Calculate the current ratio and working capital for 3M for 2019 and 2020.
- The 2024 income statement of Adrian Express reports sales of $17,931,000, cost of goods sold of $11,154,000, and net income of $1,660,000. Balance sheet information is provided in the following table. ADRIAN EXPRESS Balance Sheets Assets Current assets: Cash Accounts receivable December 31, 2024 and 2023 2024 $660,000 1,520,000 Inventory Long-term assets Total assets Liabilities and Stockholders' Equity Current liabilities Long-term debt Common stock Retained earnings 2023 1,920,000 4,860,000 $ 8,960,000 $ 1,960,000 2,360,000 1,940,000 2,700,000 $ 820,000 1,060,000 1,460,000 4,300,000 $ 7,640,000 $ 1,720,000 2,460,000 1,940,000 1,520,000 Total liabilities and stockholders' equity $ 8,960,000 $ 7,640,000 Industry averages for the following four ratios are as follows: Average collection period Average days in inventory Current ratio Debt to equity ratio Required: 26 days 63 days 2 to 1 35% 1. Calculate the four ratios listed above for Adrian Express in 2024 assuming all sales are on…The following information has been extracted from the financial statements and notes of CASAN Ltd. 2019 2018 Cash and Cash Equivalents 59,100 47,700 Account Receivable(net) 137,800 129,800 Account Payable 45,750 39,950 Revenue 610,000 625,000 Cost of Goods Sold 559,500 568,500 Profit 50,500 56,500 Inventory 223,700 189,300 Total assets 540,000 555,000 Current Liabilities 250,900 265,700 Total liabilities 300,000 330,000 Short-term investments 75,400 85,900 Based on the above information calculate the following ratios: 1) Return on assets for 2019. 2) Profit Margin ratio for 2019. 3) Debt to assets ratio for 2019. 4) Acid-test ratio for 2018. 5) Inventory Turnover ratio for 2019.The 2021 income statement of Adrian Express reports sales of $19,710,000, cost of goods sold of $12,350,000, and net income of $1,780,000. Balance sheet information is provided in the following table. Assets Current assets: Cash ADRIAN EXPRESS Balance Sheets December 31, 2021 and 2020 Accounts receivable Inventory Long-term assets Total assets Liabilities and Stockholders' Equity Current liabilities Long-term liabilities Common stock Retained earnings Total liabilities and stockholders' equity Gross profit ratio Return on assets Profit margin Asset turnover Return on equity 45% 25% 15% 2021 Industry averages for the following profitability ratios are as follows: 3.5 times 35% 2020 $ 740,000 $ 880,000 1,650,000 1,130,000 2,070,000 1,550,000 4,940,000 4,360,000 $9,400,000 $7,920,000 $1,964,000 $1,784,000 2,436,000 2,524,000 1,950,000 1,930,000 3,050,000 1,682,000 $9,400,000 $7,920,000