Homework answers / question archive / 1)You are a business Journalist reporting on the financial performance of companies

1)You are a business Journalist reporting on the financial performance of companies

Finance

Share With

1)You are a business Journalist reporting on the financial performance of companies. In a recent interview with the CEO of an engineering company, the CEO stated that the company is performing very well at present and because it is using the most modern engineering technology while at the same time keeping its inventory levels low. The CEO stated that the use of state-of-the-art technology coupled with low inventory levels will soon result in the company achieving high profit levels The CEO presented the following ratio analysis to support his statements: 2017 2018 2019 2020 Current ratio 1.30 1.70 1.90 2.10 Quick ratio 1,20 0.80 0.50 0.40 Required: Do you agree with the CEO's statement about profits? Use the information provided in the table to explain your answer.

2) LabraDo is considering launching a new compostable toy for Labradors. After conducting a $1000 survey across its customers, the company expects that the new product will be in high demand and generate sales of $125,000 a year. The production costs of the toys are 30% of sales per year. Production of the toys will require an initial capital investment of $300,000 and will be depreciated straight-line over the life of the project (5 years). Assuming a tax rate of 35%, what is the after-tax cash flow in year 3?