Reference no: EM131117001

1. Ratio Analysis How ser Inc. is a manufacturer of electronic components and accessories with total assets of $20,000,000. Selected financial ratios for how ser and the industry averages for firms of similar size are presented below. How ser is being reviewed by several entities whose interests vary, and the company's financial ratios are a part of the data being considered. Each of the parties listed below must recommend an action based on its evaluation of Howser's financial position. Citizens National Bank. The bank is processing Howser's application for a new 5-year term note. Citizens National has been Howser's banker for several years but must reevaluate the company's financial position for each major transaction.Charleston Company. Charleston is a new supplier to How ser and must decide on the appropriate credit terms to extend to the company. Shannon Financial A brokerage firm specializing in the stock of electronics firms that are sold over-the counter, Shannon Financial must decide if it will include How ser in a new fund being established for sale to Shannon Financials clients. Working Capital Management Committee, this is a committee of Howser's management personnel chaired by the chief operating officer. The committee is charged with the responsibility of periodically reviewing the company's working capital position, comparing actual data against budgets, and recommending changes in strategy as needed.

(a) Describe the analytical use of each of the six ratios presented above.

(b) For each of the four entities described above, identify two financial ratios, from those ratios presented in Illustration 24A-1 that would be most valuable as a basis for its decision regarding How ser.

(c) Discuss what the financial ratios presented in the question reveal about how ser. Support your answer by citing specific ratio levels and trends as well as the interrelationships between these ratios.