13 A review of Chadwyn Corporations current radio shoves tis

13) A review of Chadwyn Corporation\'s current radio shoves tist the ratio dedlosed from 2014 lo 3013, pomitile reason for this would be that X A) Chadwon managed its current assuts and currnt liabilbies to that its degree of short-te mproved from 2014 to 2015 B) Both current assets and current liabilthies increased in 2015 but caresd iahiites grew st a fanter Chadwyn dedded to hold more cuent asets per dolar of current liabiätbes in 2015 than in 20)4 D) None of the above would be consistent with a deckine in Chadwyn\'s current ratio 14) Assume that the prolit margin s 0.08, total asset tumover is 1.15, and there is $0.50 in total delbt per dallar o otal assets According to the Dulent system of financial ratio analysis, ROE is approximately A)18.4% B) 956% C)1.84% 15) Over tizme, Crosby, Inc. has seen its cash erag ratio decmease and its total asset tairnover ratio increase Which of the following could you conclude from these changes? A) Crosby is doing a bettee job in generating sales from its assets. B) Crosby is less ikely to delauit on its outstanding debt C) Crosby is now holding more ash in relatin loits t expense D) The changes described shove are totally unrelated to any of the above

Solution

For question 13 correct option is B

For 14 correct option is A

ROE = profit margin * asset turnover * financial leverage

= .08 * 1.15 * total asset/average share holder equity

= .08 * 1.15 * 1/.5 = 18.4%

For 15 correct option is A i.e., Crosby is doing better job in generating sales from its assets.