QUESTION
Which ratio or ratios from this chapter do you think should be of greatest interest to:
(a) a pension fund considering investing in a corporation”s 20-year bonds?
(b) a bank contemplating a short-term loan?
(c) an investor in common stock?
(a) a pension fund considering investing in a corporation”s 20-year bonds: solvency ratios including debt-equity ratio, Total debt ratio. (b) a bank contemplating a short-term loan: Liquidity ratios including current ratio and
uick ratio. (c) an investor in common stock: Profitability ratios including earnings per share, net profit margin, return on equity, dividend per share.
ANSWER:
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