19.5. Ratio Analysis in Tech Companies (BTech CSE Context)

Try these first

1. 1.

   What does the Current Ratio measure?

   Hint

   Think about what cash and bills a company needs to manage.

2. 2.

   What is an ideal Quick Ratio?

   Hint

   Think about how many dollars in quick assets should cover one dollar in current liabilities.

3. 3.

   What is the ideal Current Ratio?

   • 1:1
   • 2:1
   • 3:1

   Hint

   Think about how many dollars in assets should ideally cover liabilities.

4. 4.

   True or False: The Quick Ratio includes inventory in its calculation.

   • True
   • False

   Hint

   Remember what this ratio measures.

5. 5.

   A tech company reports its Total Debt as $200,000 and Shareholders' Equity as$100,000. Calculate the Debt-to-Equity Ratio and analyze what this suggests about the company’s financial leverage.

   Hint

   Look at the leverage and how much of the company is financed through debt versus equity.

6. 6.

   A SaaS company generates $300,000 in Net Sales with a Gross Profit of$180,000. Calculate the Gross Profit Ratio and discuss its significance.

   Hint

   Consider how this ratio can impact strategic pricing decisions.