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(TCO G) Please review the following 6 ratios for Langley Company and XYZ Inc. for the year ended 2014, and address the 2 questions below.

(TCO G) Please review the following 6 ratios for Langley Company and XYZ Inc. for the year ended 2014, and address the 2 questions below.

Ratio Name

Langley Company

XYZ Inc.

(a) Rate of return on total assets

21.5%

17.9%

(b) Debt ratio

25.0%

10.1%

(c) Accounts receivable turnover

8.3

7.5

(d) Price-Earnings ratio

25

19

(e) Inventory turnover

6.1

5.2

(f) Current ratio

1.96

3.12

Instructions: This is a 2-part question.

(1) Explain the meaning of each of the Langley Company ratios above. (18 points) (2) State which company performed better for each ratio. (18 points) (Points : 36)

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