Question description
Potential Issues in Ratio Analysis*** Original work with plagiarism report attached***Make sure you answer in full complete paragraphs and references for each!!!
1. As your text describes, ratio analysis is a common technique in financial analysis. One of your colleagues states that a thorough ratio analysis is all that is needed in considering the financial health of a company. Although you agree that ratio analysis is a helpful guide, there may be some potential pitfalls in ratio analysis.
Discuss at least three potential issues in utilizing ratio analysis that you would share with your colleague. In addition, calculate a liquidity, profitability, and efficiency ratio from your Week Six company to demonstrate your observations.
Develop a 200 – 300 word explanation supporting your findings.
2. *** The company I chose was General Motors Corp*****Imagine you are a representative of management in the company you have selected for your Week Six assignment and you must make a capital budgeting decision. The decision is to implement a new computer network system to decrease the time between customer order and delivery. The cost will be 10% of last year’s profits. You are charged with describing the important considerations in the decision-making process to upper management. In your response, be sure to include the following:
A description of the important factors, in addition to quantitative factors, that were considered when making this capital budgeting decision.
An explanation of how these factors are significant to the company.
A summary of how you will determine the criteria to rank capital budgeting decisions and whether some criteria are more important than others.
A calculation of the proposed return on investment based on criteria you select and justification for that ROI.
Develop a 200 – 250 word explanation supporting your recommendations.
Tip: For help with reading an annual report access this handy guide from Money Chimp (https://essays.homeworkacetutors.com/write-my-essay/moneychimp.com/articles/financials/fundamentals.htm)
