Announcement of GDB No.01
Graded Discussion Board
Corporate Finance (FIN622)
This is to inform that Graded Discussion Board (GDB) No. 01 will be opened on 12th November, 2014 for discussion and last date for posting your discussion will be 14th November, 2014.
Topic/Area for Discussion
SMR Inc. is willing to provide credit to any company in order to earn interest on it. There are two companies A and B having debt to equity ratios of 1 and 0.75; current ratios of 1.5 and 0.8; Average collection period of 18 days and 20 days; and payable turnover ratios of 2 and 0.7 respectively. Inventory turnover is 9 times for both. Which ratios are relevant to compare the credit worthiness of both companies and discuss how they’ll help SMR Inc. to assess the right company to lend?
(Note: Your discussion should not exceed 150 words. No calculation is needed; you are only supposed to discuss the scenario.)
This Graded Discussion Board will cover first 6 lessons.
Your discussion must be based on logical facts.
Tariq Brother plzzz share ur idea about this GDB
Lets Discuss first.....Ratios in this scenario
plz dicuss i m confused
Debt Equity Ratio is more suitable for this
m i right anyone??????
yes you r right.
The debt-to-equity ratio (D/E) is a financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets. Closely related to leveraging, the ratio is also known as Risk, Gearing or Leverage. The two components are often taken from the firm's balance sheet or statement of financial position (so-called book value), but the ratio may also be calculated using market values for both, if the company's debt and equity are publicly traded, or using a combination of book value for debt and market value for equity financially.
watch this video and solve it