Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Given the following financial data for two firms in the computer industry. Balance Sheet (in thousands) XYZ Company $ 10 90 117 240 Cash
Given the following financial data for two firms in the computer industry. Balance Sheet (in thousands) XYZ Company $ 10 90 117 240 Cash A/R Inventory Plant/Equip. Total assets ABC Company $ 15 50 55 150 Current liabilities Bonds payable 270 57 75 457 $101 100 Common stock Retained earnings Total Sales Cost of goods sold Interest expense Income before taxes Net Income Tax rate ROA 9% ROE 15.5% 50 88 $270 ABC Income Statement (In thousands) $500 300 7 80 32 40% XYZ $700 475 8 $2.50 $70 105 42 40% Other Selected Data $2.50 $80 Dividends per share Market Price year end Computer Industry (Averages for 19x7) Current ratio 2.1 to 1 Acid-test (quick) 1.1 to 1 Inventory turnover 5 times Debt/Equity 55% Dividend Yield 2.2% 70 186 $457 Compute the following ratios for each company: 1) current 2) acid-test (quick) 3) inventory turnover 4) TIE 5) debt-to-equity ratio 6) ROA and 7) ROE. Using the ratios and the industry data, present conclusions regarding the attractiveness of the two companies? (14 pts)
Step by Step Solution
★★★★★
3.41 Rating (154 Votes )
There are 3 Steps involved in it
Step: 1
To calculate the requested ratios well use the following formulas 1 Current Ratio Current Assets Current Liabilities 1 Acidtest Quick Ratio Current Assets Inventory Current Liabilities 1 Inventory Tur...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started