Reference no: EM132691208

You are a fresh analyst hired by the CFO of a small to midsized company. She is aware of the fact you wrote a paper of Financial Statement analysis and wants to check your financial knowledge as well as common sense: There are two firms, A and B. A is a healthy, well -funded and profitable firm. B, on the other hand, is cash starved, facing potential (but not yet) bankruptcy. She has information about the following classes of ratios for both firms: Liquidity, Asset Management, Debt Management, Profitability and Market Value Ratios. She said to you," I don't have time to look at all these ratios, I would like you to rank order three classes of ratios in each case (One ranking for firm A and another ranking for firm B) based on the particular situation each firm is in (healthy vs. failing). I understand that the two sets could be quite different. I would like you to explain why you choose that particular rank ordering in each case. While ranking, you may simply indicate the class of ratios (for example, profitability), rather than a specific ratio within that class, such as Return on Assets (ROA)."