Web Search 2 Essay

b. Why do you think Microsoft decided to defer a portion of its revenues in fiscal 1996?

3.  When prices are increasing at a rate of 6 percent, the cost of products would double in about 12 years.  TRUE

2. List the four basic types of financial ratios used to measure a company’s performance, give an example of each type of ratio and explain its significance.

3) Assuming a 15% operating income return target on the beginning investment, what sales level is needed to hit this target?

How would your answer to above change if purchase prices for Dow Chemical’s inventories are expected to increase by approximately 50% in fiscal year 2013?

6. Debt Ratio: This nifty ratio is found by taking total debt over/divided by total assets. This directly shows the amount of debt a company has relative to its assets.

The return on assets ratio measures the overall profitability of assets in terms of the income earned on each dollar invested in assets. Kohl's has a 8.3% but JC Penne only has 3.0%.

21) Refer to the graph on the left. To maximize profits, this firm would produce:

a. Assume the company's monthly target profit is $16,060. Determine the unit sales to attain that target profit. Show your work!

These ratios are used to measure companies’ operating cycle.() Firstly in 2012, the receivables turnover for Oroton and Country Road are 54.86 times per year and 93.02 times per year. This indicates that Country road can collect cash from their customer faster than Oroton. Secondly, the payables turnover for Oroton and Country Road are 12.15 and 8.44 times per years. And it would be easier to analyze day payables which Oroton’s is 30 days and Country road’s is 43 days. This ratio shows that Country road has longer credit term to pay their suppliers than Oroton. Finally, the inventories turnover for Oroton and Country Road are 54.86 and 93.02 times per year. It is obvious that Oroton takes longer time to sell all of their inventories than country road. All of these ratios indicate that Country road has shorter operating cycle than Oroton. Therefore, they tend to have higher performance in terms of liquidity because they can generate cash faster.

Importance: It gives us the ratio for company’s capability of creating sales using their investment fixed assets.

a. Between 2010 and 2011 total revenue increased by a higher percentage than net income. *

a. You should assume that operating costs will grow annually at 1% in real terms.

Suppose that a firm’s sales were $3,750,000 five years ago and are $5,250,000 today. What

The return on assets is examining how effective the company's resources are being utilized to generate profits. For managers, this helps them to decide if a particular strategy is allowing the business to maximize its productivity. This is important, in determining if the firm will need to refocus their efforts on other areas in order to increase the total returns. ("Financial Ratios," 2011)