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Baldwin Company - reporting of ratios - 3 Oct, 2012

As  Baldwin Company controller, you are responsible for informing the board of directors about its financial activities.

At the board meeting, you present the following information.

 

 

2011

2010

2009

Sales trend percent

147.0%

135.0%

100.0%

Selling expense to sales

10.1%

14.0%

15.6%

Sales to plant assets ratio

3.8 to 1

3.6 to 1

3.3 to 1

Current ratio

2.9 to 1

2.7 to 1

2.4 to 1

Acid-test ratio

1.1 to 1

1.4 to 1

1.5 to 1

Inventory turnover

7.8 times

9.0 times

10.2 times

Accounts Receivable turnover

7.0 times

7.7 times

8.5 times

Total assets turnover

2.9 times

2.9 times

3.3 times

Return on total assets

10.4%

11.0%

13.2%

Return on stockholder's equity

10.7%

11.5%

14.1%

Profit margin ratio

3.6%

3.8%

4.0%

 

After the meeting, the company's CEO holds a press conference with analysts in which she mentions the following ratios:

 

 

2011

2010

2009

Sales trend percent

147.0%

135.0%

100.0%

Selling expense to sales

10.1%

14.0%

15.6%

Sales to plant assets ratio

3.8 to 1

3.6 to 1

3.3 to 1

Current ratio

2.9 to 1

2.7 to 1

2.4 to 1

 

1-Why do you think the CEO decided to report 4 ratios instead of the 11 prepared?

 

2-Comment on the possible consequences of the CEO's reporting of the ratios selected.



Category : Financial Accounting

Search Keywords :
Baldwin , Reporting , Ratios , CEO , Analysts , Consequences , Report 


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Answer  - 3 Oct, 2012
Please see the excel attachment....


Rating :5
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