– The Charter Company
Answer these questions using the overview (p. 1) and 5 Exhibits (pp. 3 – 9). Write your responses in a new thread on the board. 1. Calculate the following ratios for each year during the period 1980-1983. Comment on the trend indicated by each ratio with respect to the financial performance and condition of the Charter Company.
Return on average total assets (assume a 46% income tax rate) ROTA=Sales/Total assests
The number are normal expect in 1981.
i. Accounts receivable (based on average gross trade receivables). RTR= Sales/Average net receivables
The company is not selling as fast as they are receiving.
ii. Inventory (based on average total inventory).
ITR=Sales/Average total inventory
iii. Total assets (based on average total assets).
TAR=Sales/Average total assets
i. Current ratio
Current Assets/Current Liabilities
ii. Quick ratio
Current Assets–total inventories/Current Liabilities
The ratio is high showing the company can’t meet their obligations.
i. Total liabilities to total equities
ii. Total long-term debt to total long-term debt plus owner’s equity 1983=40.3%...
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