FIN350 Week 2 Discussion 1 & 2 Latest 2017 June

dq 1

Individuals performing ratio analysis include (1) banks evaluating potential loan applications from small businesses, (2) investment analysts evaluating the investment quality of a firm’s stock, and (3) internal management, assessing the firm’s current strengths and weaknesses. Select one of the three parties above, and for that party, identify which of the five ratio groups (liquidity, activity, debt, profitability, or market) would be of most value and which would probably be of least value. Explain the reasons behind your choices.

dq 2

What is an advantage that the Du-Pont system of analysis offers over traditional ratio analysis? (Try and identify something original that your classmates have not yet mentioned.) Are there any disadvantages? Does the Du-Pont system analyze performance in each of the five main ratio groups? Explain.