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, Cash* = 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 ( + + ) / = Browse ( + + ) / = b. Inventory turnover Select the formula and then enter the amounts to calculate the inventory turnover for each company. (Round the ratios to two decimal places, X.XX.) / = Inventory turnover Authority / = Browse / = 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 / = Browse / = 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 / = Browse / = e. Times-interest-earned ratio Select the formula and then enter the amounts to calculate the times-interest-earned ratio for Browse. (Round the ratio to one decimal place, X.X.) / = Times-interest-earned ratio Browse / = 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 Authority ( - ) / = % Browse ( - ) / = % g. Earnings 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 "0". Round EPS to two decimal places, X.XX.) ( - ) / = EPS Authority ( - ) / = Browse ( - ) / = h. Price-earnings 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 / = Browse / = 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 or enter any number in the input fields and then continue to the next question.

X Data Table Data Table Selected income statement data for the current year: Selected balance sheet and market price data at end of current year Authority Browse Authority $ 610,000 $ 457,000 94,000 Net sales (all on credit). Cost.of.goods sold Income from operations. Interest expense Net income. Browse 516,000 390,000 79,000 10,000 35,000 $ 64,000 22,000 $ 2,000 188,000 208,000 19,000 439,000 972,000 370,000 673,000 Data Table Current assets: Cash Short-term investments Current receivables, net Inventories Prepaid expenses Total current assets Total assets Total current liabilities Total liabilities Preferred stock, 8%, $150 par Common stock, $1 par (115,000 shares) $5 par (10,000 shares) Total stockholders' equity Market price per share of common stock 41,000 13,000 166,000 184,000 17,000 421,000 934,000 342,000 695,000 30,000 Selected balance sheet data at beginning of current year: Authority Browse 115,000 $ 146,000 $ 211,000 850,000 195,000 196,000 907,000 291,000 30,000 50,000 239,000 Balance sheet: Current receivables, net Inventories Total assets Long-term debt Preferred stock, 8%, $150 par Common stock, $1 par (115,000 shares) $5 par (10,000 shares) Total stockholders' equity 299,000 $ 5.60 $ 71.72 115,000 -X Requirements 260,000 50,000 216,000 Print Done 1. Compute the following ratios for both companies for the current year, and decide which company's stock better fits your investment strategy. a. Quick (acid-test) ratio b. Inventory turnover c. Days' sales in average receivables d. Debt ratio e. Times-interest-earned ratio f. Return on common stockholders' equity g. Earnings per share of common stock h. Price-earnings ratio Assume that you are considering purchasing stock as an investment. You have narrowed the choice to either Authority Corporation stock or Browse Company stock and have assembled the following data for the two companies. IB (Click the icon to view the income statement data.) B (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 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, Cash* = 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 Browse + )/ b. Inventory turnover Select the formula and then enter the amounts to calculate the inventory turnover for each company. (Round the ratios to two decimal places, X.XX.) Inventory turnover Authority Browse 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 Days' sales in average receivables Authority Browse 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 Browse e. Times-interest-earned ratio Select the formula and then enter the amounts to calculate the times-interest-earned ratio for Browse. (Round the ratio to one decimal place, X.X.) Times-interest-earned ratio Browse 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 ROE ) % Authority Browse ) % g. Earnings 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 "0". Round EPS to two decimal places, X.XX.) ) EPS Authority Browse ) h. Price-earnings 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.) P/E ratio Authority Browse Which company's stock better fits your investment strategy? The common stock of v seems to fit the investment strategy better. Its price-earnings ratio is and a. Quick (acid-test) ratio Select the formula and then enter the amounts to calcul ( + Authority Browse (Avg common equity Average daily sales b. Inventory tu Average inventory ounts to calcula Select the forn Average receivables Capital charge Cash* Authority [ Common shares ols Browse [ Cost of capital c. Days' sales Cost of goods sold ounts to calcul: Current assets Select the forn Current liabilities Current receivables Interest expense Authority Inventories Browse Long-term debt d. Debt ratio Mkt price per share Net income Select the forn Net sales ST investments Total assets Choose from a Total liabilities Total SE ounts to calcul Der in the inpu b. Inventory turnover Select the formula and then enter the amou Authority Browse Average common equity Average daily sales c. Days' sales Average inventory Select the for Average receivables Capital charge Cash Authority Common shares ols Browse Cost of capital d. Debt ratio Cost of goods sold Current assets Select the for Current liabilities Current receivables Income from operations Authority Interest expense Browse Inventories e. Times-inter Long-term debt Select the for Market price per share Net income Net sales Browse Short-term investments Total assets f. Return on Total liabilities Total stockholders' equity c. 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The common stock of seems to fit the investment st put fields and then ca Choose from any list Authority Corporation Browse Company P/E ratio Authority Browse higher than that of Browse Company higher than that of Authority Corporation lower than that of Browse 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-earnings ratio is and Choose from any list or enter any number in the input fields and then continue to the next question. 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 or enter any number in the input fields and then continue to the next question. Browse Company appears to be in slightly better shape than Authority Corporation Authority Corporation appears to be in slightly better shape than Browse Company