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Fin-622--Corporate Finance GDB No-1 Due Date November 14-2014

Announcement of GDB No.01

Corporate Finance (FIN622)

Dear Students!

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

“Ratio Analysis”

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.

• The GDB will open and close on above specified date and time. Please note that no grace day or extra time will be given for posting comments on GDB.
• Use the font style “Times New Roman” and font size “12”.
• Your answer should be relevant to the topic i.e. clear and concise.
• Do not copy or exchange your answer with other students. Two identical / copied comments will be marked Zero (0) and may damage your grade in the course.

Views: 943

Replies to This Discussion

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.[1] Closely related to leveraging, the ratio is also known as RiskGearing 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.

1

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