Respuesta :
Answer:
A decline in the debt-to-equity ratio implies a decline in the creditworthiness of the firm
and
A plausible reason why Blue Hamster Manufacturing Inc.’s price to free cash flow ratio has decreased is that investors expect lower cash flow per share in the future
Explanation:
Please refer the calculated ratios below
Ratios Calculated  Â
                      Year 1    Year 2 Year 3
Price to cash flow         6.80     4.76     3.81
Inventory turnover         13.60 10.88 8.70
Debt to equity         0.60 0.48 0.38
The statements that can be included in the analysis report include:
- A decline in the debt-to-equity ratio simply means when there is a reduction in the creditworthiness that the firm has.
- A plausible reason why Blue Hamster Manufacturing Inc.’s price to free cash flow ratio has decreased is that there are investors who expect lower cash flow per share in the future.
The following information were given in year 1:
Price to ratio flow = 6.80
Inventory = 13.60
Debt to equity = 0.60
The following information were given in year 2:
Price to ratio flow = 4.76
Inventory = 10.88
Debt to equity = 0.48
The following information were given in year 3:
Price to ratio flow = 3.81
Inventory = 8.70
Debt to equity = 0.38
In conclusion, based on the above information, the reduction in the debt-to-equity ratio from 0.60 to 0.38 simply means that there's a reduction in the creditworthiness that a firm has.
In conclusion, the correct options are A and B.
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