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CP15-38 (similar to) 3 Question Help Wonder Wilderness Company wants to invest some of its excess cash in trading securities and is considering two investments, The Boat Company (BC) and Zone Life Vests (ZLV). The income statement balance sheet, and other data for both companies follow for 2019 and 2018, as well as selected data for 2017: (Click the icon to view the data.) Read the requirements Requirement 1. Compute each ratio for both companies for 2019 and 2018. Assume all sales are credit sales. Round all ratios to two decimal places. Requirements - X a. Current ratio Begin by selecting the correct formula Current ratio a. c. e. 1. Using the financial statements given, compute the following ratios for both companies for 2019 and 2018. Assume all sales are credit sales. Round all ratios to two decimal places. Current ratio b. Cash ratio Inventory turnover d. Accounts receivable turnover Gross profit percentage f. Debt ratio g. Debt to equity ratio h. Profit margin ratio i. Asset turnover ratio j. Rate of return on common stockholders' equity k. Earnings per share I. Price/earnings ratio m. Dividend yield n. Dividend payout 2. Compare the companies' performance for 2019 and 2018. Make a recommendation to Wonder Wilderness Company about investing in these companies. Which company would be a better investment, The Boat Company or Zone Life Vests? Base your answer on ability to pay current liabilities, ability to sell merchandise and collect receivables, ability to pay long-term debt, profitability, and attractiveness as an investment. Print Done The Boat Company Comparative Financial Statements Years Ended December 31, 2019 2018 2017 Zone Life Vests Comparative Financial Statements Years Ended December 31, 2019 2018 2017 $ $ 430,780 $ 258,532 425,290 256,790 410,400 $ 383,120 299,450 280,670 Income Statement Net Sales Revenue Cost of Goods Sold Gross Profit Operating Expenses Operating Income Interest Expense Income before Income Tax Income Tax Expense 172,248 153,550 168,500 151,113 110,950 78,500 102,450 70,160 18,698 825 17,387 725 32,450 2,820 32,290 2,980 17,873 5,148 16,662 4,330 29,630 8,750 29,310 8,710 $ 12,725 $ 12,332 Net Income 20,880 $ 20,600 $ 55,690 Balance Sheet Assets Cash and Cash Equivalents Accounts Receivable Merchandise Inventory Other Current Assets Total Current Assets 68,630 $ 44,740 79,940 16,080 70,377 44,440 $ 66,340 16,663 44,170 76,340 65,035 $ 39,800 68,540 25,025 38,660 $ 65,260 37,160 36,400 59,910 209,390 90,378 197,820 90,460 288,280 198,400 116,810 196,770 116,860 Long-term Assets $ Total Data 299,768 $ 276 270 315,210 $ 313,630 21000 55,690 65,035 $ 39,800 68,630 $ 44,740 79,940 16,080 70,377 44,440 $ 66,340 16,663 44,170 76,340 38,660 $ 65,260 37,160 36,400 59,910 68,540 25,025 209,390 90,378 197,820 90,460 198,400 196,770 116,810 116,860 315,210 $ 313,630 $ 299,768 $ 288,280 $ 276,678 310,920 Assets Cash and Cash Equivalents Accounts Receivable Merchandise Inventory Other Current Assets Total Current Assets Long-term Assets Total Assets Liabilities Current Liabilities Long-term Liabilities Total Liabilities Stockholders' Equity Common Stock Retained Earnings Total Stockholders' Equity Total Liabilities and Stockholders' Equity $ 69,570 $ 31,650 60,260 29,940 90,840 $ 96,270 90,100 105,950 196,050 101,220 90,200 187,110 72,820 125,728 198,548 80,860 117,220 198,080 111,390 16,710 128,100 102,430 15,150 117,580 197,620 103,850 $ 299,768 $ 288,280 315,210 $ 313,630 $ 20.86 $ 33.32 46.78 $ Other Data Market price per share Annual dividend per share Weighted average number of shares outstanding 51.70 0.42 0.33 0.30 0.48 8,700 7,700 8,700 7,700
