Assume that you are considering purchasing stock as an investment. You have narrowed the choice to either Authority Corporation stock or Web Company stock and have assembled the following data for the two companies. (Click the icon to view the income statement data.) (Click the icon to view data at end of current year.) (Click the icon to view data at beginning of current year.) Your strategy is to invest in companies that have low price-eamings ratlos but appear to be in good shape financially. Assume that you have analyzed other factors and that your decision depends on the results of ratio analysis. Read the requirements Requirement 1. Compute the ratios for both companies for the current year and decide which company's stock better fits your investment strategy. Begin by computing the ratios, starting with the quick (acid-test) ratio. (Abbreviations used: Avg. - average, Casht = cash and cash equivalents, Mkt = market, o's outstanding, SE = stockholders' equity, and ST = short-term.) a. Quick (acid-test) ratio Select the formula and then enter the amounts to calculate the quick (acid-test) ratios. (Round the ratios to two decimal places, X.XX.) + ) - Quick ratio Authority Web b. Inventory turnover Select the formula and then enter the amounts to calculate the inventory tumover for each company. (Round the ratios to two decimal places, X.XX.) Inventory turnover Authority Web c. Days' sales in average receivables Select the formula and then enter the amounts to calculate days' sales place, X.X.) average receivables for each company. (Use a 365-day year. Round intermediary calculations to the nearest whole number, X. Round your final answers to one decimal Days' sales in average receivables Assume that you are considering purchasing stock as an investment. You have narrowed the choice to either Authority Corporation stock or Web Company stock and have assembled the following data for the two companies. c. Days' sales in average receivables Select the formula and then enter the amounts to calculate days' sales in average receivables for each company. (Use a 365-day year. Round intermediary calculations to the nearest whole number, X. Round your final answers to one decimal place, X.X.) = Days' sales in average receivables Authority Web d. Debt ratio Select the formula and then enter the amounts to calculate the debt ratio for each company. (Enter the debt ratio in decimal form to two decimal places, X.XX.) Debt ratio Authority Web e. Times-interest-earned ratio Select the formula and then enter the amounts to calculate the times-interest-Baried ratio Web. (Round the ratio to one decimal place, XX.) + Times-interest-eamed ratio Web f. Return on common stockholders' equity Select the formula and then enter the amounts to calculate the retum on common stockholders' equity (ROE) for each company. (Complete all answer boxes. If an account has a zero balance, enter a "0". Enter the ROE as a percentage rounded to the nearest one-tenth percent, X.X%.) ROE Authority % Web % Web f. Return on common stockholders' equity Select the formula and then enter the amounts to calculate the return on common stockholders' equity (ROE) for each company. (Complete all answer boxes. If an account has a zero balance, enter a "0". Enter the ROE as a percentage rounded to the nearest one-tenth percent, X.X%.) ROE 1: Authority Web ( 1 + % g. Earnings per share of common stock Select the formula and then enter the amounts to calculate earrings per share (EPS) for each company. (Complete all answer boxes. If an account has a zero balance, enter a "o". Round EPS to two decimal places, x.xx.) EPS ( Authority Web ( h. Price-eamings ratio Select the formula and then enter the amounts to calculate the price-earnings (P/E) ratio for each company. (Enter amounts in the formula to two decimal places, X.XX, but then round the P/E ratios to one decimal place, X.X, as needed.) P/E ratio Authority Web Which company's stock better fils your investment strategy? The common stock of seems to fit the investment strategy better. Its price-samnings ratio is . and - Data Table - X Forpo Data Table Selected income statement data for the current year: sume Selected balance sheet and market price data at end of current year: Authority Web Authority Web Net sales (all on credit) 605,000 $ 527,000 390,000 460,000 Current assets: Cash S 94.000 69,000 s you Cost of goods sold Income from operations Interest expense Net income 41,000 15,000 15,000 an n and Short-term investments Current receivables, net Inventories 27,000 $ 10,000 188,000 210,000 163,000 70,000 39,000 185,000 lace - 12,000 12,000 Data Table Q Prepaid expenses Total current assets Total assets Selected balance sheet data at beginning of current year: On 447,000 972,000 362,000 666,000 Total current liabilities 416,000 932,000 337,000 690,000 35,000 Authority Web Total liabilities two S 190,000 115,000 144,000 $ 211,000 853,000 194,000 Preferred stock, 10%, $175 par , $ Common stock, $1 par (115,000 shares) () $5 par (10,000 shares) Total stockholders' equity Market price per share of common stock 50,000 906,000 306,000 242,000 Balance sheet: Current receivables, net , Inventories Total assets Long-term debt Preferred stock, 10%, $175 par Common stock, S1 par (115,000 shares) $5 par (10,000 shares) Total stockholders' equity S 71.00 9.15 $ 300,000 35,000 365 115.000 50.000 224.000 Print Done Print Done hlee 264.000 Assume that you are considering purchasing stock as an investment. You have narrowed the choice to either Authority Corporation stock or Web Company stock and have assembled the following data for the two companies. (Click the icon to view the income statement data.) (click the icon to view data at end of current year.) (Click the icon to view data at beginning of current year.) Your strategy is to invest in companies that have low price-eamings ratios but appear to be in good shape financially. Assume that you have analyzed all other factors and that your decision depends on the results of ratio analysis. Read the requirements = Quick ratio + Authority (Avg common equity Web ( Average daily sales b. Inventory turri Select the formul Average inventory calculate the inventory tumover for each company. (Round the ratios to two decimal places, X.XX.) Average receivables Inventory turnover Authority Web Capital charge c. Days' sales in Cash calculate days' sales average receivables for each company. (Use a 365-day year. Round intermediary calculations to the nearest whole number, X. Round your final answers to one decimal Select the formul Common shares ols place, X.X.) Cost of capital = Days' sales in average receivables Authority Web Cost of goods sold Current assets d. Debt ratio Select the formul Current liabilities calculate the debt ratio for each company. (Enter the debt ratio in decimal form to two decimal places, X.XX.) Current receivables Choose from any a input fields and then continue to the next question. Interest expense Next > Next Inventories Assume that you are considering purchasing stock as an investment. You have narrowed the choice to either Authority Corporation stock or Web Company stock and have assembled the following data for the two companies. (Click the icon to view the income statement data.) (Click the icon to view data at and of current year.) (Click the loon to view data at beginning of current year.) Your strategy is to cost for goods solat have low price-earnings ratios tout appear to be in good shape financially. Assume that you have analyzed all other factors and that your decision depends on the results of ratio analysis. Read the require Current assets b. Inventory turi Current liabilities Select the formul Current receivables calculate the inventory tumover for each company. (Round the ratios to two decimal places, X.XX.) = Inventory turnover Authority Interest expense Web Inventories c. Days' sales in Select the formul Long-term debt calculate days' sales average receivables for each company. (Use a 365-day year. Round intermediary calculations to the nearest whole number, X. Round your final answers to one decimal place, X.X.) Mkt price per share Days' sales in average receivables Net income Authority Web Net sales d. Debt ratio ST investments Select the formul calculate the debt ratio for each company. (Enter the debt ratio in decimal form to two decimal places, X.XX.) Total assets Debt ratio Authority Web Total liabilities Total SE Assume that you are considering purchasing stock as an investment. You have narrowed the choice to either Authority Corporation stock or Web Company stock and have assembled the following data for the two companies. (Click the icon to view the income statement data.) (Click the icon to view data at end of current year.) (Click the icon to view data at beginning of current year.) Your strategy is to invest in companies that have low price-earnings ratios but appear to be in good shape financially. Assume that you have analyzed all other factors and that your decision depends on the results of ratio analysis. Read the requirements. ( ) % Authority Web ( ) % g. Eamings per share of common stock Select the formula and then enter the amounts to calculate earnings per share (EPS) for each company. (Complete all answer boxes. If an account has a zero balance, enter a "O". Round EPS to two decimal places, X.XX.) ) EPS Authority + = Web ) h. Price-eamings ratio Select the formula and then enter the amounts calculate the price-carnings (P/E) ratio for each company. (Enter amounts in the formula two decimal places, X.XX, but then round the P/E ratios to one decimal place, X.X, as n P/E ratio Authority Web Which company's stock better fits your investment strategy? The common stock of seems to fit the investment strategy better. Its price-earnings ratio is and Choose from any list Authority Corporation fields and then continue to the next question. Web Company Assume that you are considering purchasing stock as an investment. You have narrowed the choice to either Authority Corporation stock or Web Company stock and have assembled the following data for the two companies. (Click the icon to view the income statement data.) (Click the icon to view data at end of current year.) E (Click the icon to view data at beginning of current year.) Your strategy is to invest in companies that have low price-earnings ratios but appear to be in good shape financially. Assume that you have analyzed all other factors and that your decision depends on the results of ratio analysis. Read the requirements ROE Authority ) % Web ) + % g. Earnings per share of common stock Select the formula and then enter the amounts to calculale earrings per share (EPS) for each company. (Complete all answer boxes. If an account has a zero balance, enter a "0". Round EPS to wo decimal places, X.XX.) EPS Authority Web ( ) higher than that of Web Company h. Price-eamings ratio Select the formula and then enter the amounts to calculate the price-earnings (P/E) ratio for each company. (Entera P/E ratio but then round the P/E ratios to one decimal place, XX, as needed.) , ) higher than that of Authority Corporation + Authority Web lower than that of Web Company lower than that of Authority Corporation Which company's stock better fits your investment strategy The common stock of seems to fit the investment strategy better. Its price-earrings ratio is and Assume that you are considering purchasing stock as an investment. You have narrowed the choice to either Authority Corporation stock or Web Company stock and have assembled the following data for the two companies. (Click the icon to view the income statement data.) Click the icon to view data at end of current year.) (Click the loon to view data at beginning of current year.) Your strategy is to invest in companies that have low price-camnings ratios but appear to be in good shape financially. Assume that you have analyzed all other factors and that your decision depends on the results of ratio analysis. Read the requirements -TE Authority Web g. Earnings per share of common stock Select the formula and then enter the amounts calculate earrings per share (EPS) for each company. (Complete all answer boxes. If an account has a zero balance, enter a "O". Round EPS to two decimal places, Xxx.) ) - EPS Authority ) Web ) h. Price-eamings ratio Select the formula and then enter the amounts to calculate the price-earnings (P/E) ratio for each company. (Enter amounts in the formula to two decimal places, X.XX, but then round the P/E ratios to one decimal place, XX, as needed.) PE ratio Web Company appears to be in slightly better shape than Authority Corporation Authority Corporation appears to be in slightly better shape than Web Company price-eamings ratio is V and