Discuss the extent to which the stock market

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Question 1. Calculate the following ratios for each year during the period 1980-1983. Comment on the trend indicated by each ratio with respect to the financial performance and condition of the Charter Company.

a. Profitability:

Return on average total assets (assume a 46% income tax rate)

b. Turnover:

i. Accounts receivable (based on average gross trade receivables).

ii. Inventory (based on average total inventory).

iii. Total assets (based on average total assets).

c. Liquidity:

i. Current ratio

ii. Quick ratio

d. Solvency

i. Total liabilities to total equities

ii. Total long-term debt to total long-term debt plus owner's equity

Question 2. The Charter Company had a number of nonrecurring and/or noncash components of income from continuing operations in 1983. Beginning with the 1983 earnings from continuing operations.

Question 3. Based on the information presented in the case, discuss the extent to which the stock market, in the aggregate, anticipated Charter's problems and priced its common stock accordingly

Reference no: EM132478853

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