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Industry Average Financial ratios this year and last year This Last ...

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Question

Finance

Industry Average Financial ratios this year and last year
This Last
year year
Liquidity
Net Working Capital $5,056 $4,892
Current Ratio 1.781.69
Quick Ratio (Acid Test)1.551.51
Activity
Inventory Turnover 7.417.58
Average Age of Inventory .021.021
Average Collection Period 22.823.4
Fixed Asset Turnover 1.541.62
Total Asset Turnover .89.91
Debt
Debt 75%77%
Times Interest Earned 6.47.0
Profitability
Gross Profit Margin 24%28%
Net Profit Margin 4.7%4.9%
Return on Total Assets 4.6%4.7%
Return on Equity 20.7%33.8%
Questions
1. Compute Chrysler's financial ratios for the past two years.
2. Compare these ratios to the industry's average. Comment on Chrysler's strengths and weaknesses by ratio category.
3. Should Kerkorian have pursued the purchase of Chrysler?
4. If Kerkorian did not want to takeover Chrysler, what other reasons might he have had for trying to convince other people that Chrysler was a takeover candidate?

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