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Make up a numerical example where both the top and bottom of a fraction go either up or down but the value of the whole fraction decreases.
1. Make up a numerical example where both the top and bottom of a fraction go either up or down but the value of the whole fraction decreases.Â
2. Make up a numerical example where the common-size value for inventories is 7.32 %. (Do not use 100 as the denominator)
3. Make up a numerical example where the common-size value for COGS is 43.78 %. (Do not use 100 as the denominator)
4. For which of the financial ratios on our formula sheet do we want the value to be at least 1.0?
5. Make up initial values for each ratio in the DuPont Identity then change each ratio one at a time to cause the computed ROE to decline.
6. What do each of the ratios on our formula sheet represent—liquidity, long-term solvency, asset management, profitability or market value?
7. For each of the ratios on our formula sheet, do higher or lower values represent desirable financial performance?