- X More Info Assume that you are purchasing shares in a company in the variety store and gas bar supply business. Suppose you have narrowed the choice to ABC Trading Ltd. and Lyn Corp. and have assembled the following data: A (Click the icon to view the income statement data.) A (Click the icon to view the balance sheet and market price data.) Your investment strategy is to purchase the shares of companies that have low pricelearnings ratios but appear to be in good shape financially. Assume you have analyzed all other factors, and your decision depends on th Required OST 19,VUU TI2,Vuu a. Compute the current ratio for both companies. (Round your answers to two decimal places.) ABC Lyn Current ratio: Income statement x b. Compute the acid-test ratio for both companies. (Round your answers to two decimal places.) ABC Lyn Acid-test ratio c. Compute the inventory turnover for both companies. (Round interim calculations to the nearest whole dollar and ABC Lyn Selected income statement data for the year ended December 31, 2020 ABC Trading Ltd. Lyn Corp. Net sales (all on credit) $ 1,068,000 $ 1,258,000 Cost of goods sold 614,000 740.000 Income from operations 200,000 212,000 Interest expense 42,000 12,000 Net income 83,000 140,000 Inventory turnover: 1.38 1.56 Short-term investments 0 25,500 Current receivables, net 322,000 392,000 Inventories 424,000 460,000 Prepaid expenses 25,500 28,000 $ 915,500 $ 1,017,500 Total current assets Total assets $ 2,078,000 $ 2,356,000 Total current liabilities 764,000 806,000 Total liabilities 1,444,000 1,524,000 Preferred shares, $10.00 (360 shares) 66,000 Common shares, (75,000 shares) 450,000 Common shares, (10,000 shares) 100,000 Total shareholders' equity 634,000 832,000 Market price per common share $ 91.00 $ 55.00 ABC's preferred dividends are paid each year, there are no dividends in arrears. Selected balance sheet data at January 1, 2020 ABC Trading Lyn Ltd. Corp. Current receivables, net $ 346,000 $ 284,000 Inventories 466,000 488,000 Total assets 1,988,000 1,736,000 Preferred shareholders' equity, $10.00 (360 shares) 66,000 Common shares, (75,000 shares) 450,000 (10,000 shares) 100,000 Total shareholders' equity 568,000 724,000 d. Compute the days' sales in inventory for both companies. (Round all answers to the nearest whole number.) ABC Lyn Days' sales in inventory Print Done e. Compute the accounts receivable turnover for both companies. (Round interim calculations to the nearest whole ABC Lyn Accounts receivable turnover f. Compute the Days' sales in receivables. (Round interim and final answers to the nearest whole number.) ABC Lyn Days' sales in receivables: g. Compute the debt ratio for both companies. (Round your answers to two decimal places.) ARC Ivn Print Done Enter any number in the edit fields and then continue to the next question. - X More Info Assume that you are purchasing shares in a company in the variety store and gas bar supply business. Suppose you have narrowed the choice to ABC Trading Ltd. and Lyn Corp. and have assembled the following data: (Click the icon to view the income statement data.) (Click the icon to view the balance sheet and market price data.) Your investment strategy is to purchase the shares of companies that have low pricelearnings ratios but appear to be in good shape financially. Assume you have analyzed all other factors, and your decision depends on th Required g. Compute the debt ratio for both companies. (Round your answers to two decimal places.) ABC Lyn Debt ratio: $ - X Income statement h. Compute the debt/equity ratio for both companies. (Round your answer to two decimal places.) ABC Lyn Debt/Equity ratio: i. Compute the times-interest-earned ratio for both companies. (Round your answers to two decimal places.) ABC Lyn Selected income statement data for the year ended December 31, 2020 ABC Trading Ltd. Lyn Corp. Net sales (all on credit) $ 1,068,000 $ 1,258,000 Cost of goods sold 614,000 740,000 Income from operations 200,000 212,000 Interest expense 42,000 12,000 Net income 83,000 140,000 Times-interest-earned ratio: 144, VUV TI2,Vuu Short-term investments 0 25,500 Current receivables, net 322.000 392,000 Inventories 424,000 460,000 25,500 Prepaid expenses 28,000 915,500 $ 1,017,500 Total current assets Total assets $ 2,078,000 $ 2,356,000 Total current liabilities 764,000 806,000 Total liabilities 1,444,000 1,524,000 Preferred shares, $10.00 (360 shares) 66,000 Common shares, (75,000 shares) 450.000 Common shares, (10,000 shares) 100,000 Total shareholders' equity 634,000 832,000 Market price per common share $ 91.00 $ 55.00 ABC's preferred dividends are paid each year, there are no dividends in arrears. Selected balance sheet data at January 1, 2020 ABC Trading Lyn Ltd. Corp. Current receivables, net $ 346,000 $ 284,000 Inventories 466,000 488,000 Total assets 1,988,000 1,736,000 Preferred shareholders' equity, $10.00 (360 shares) 66,000 Common shares, (75,000 shares) 450,000 (10,000 shares) 100,000 Total shareholders' equity 568,000 724,000 j. Compute the return on net sales for both companies. (Round your answers to two decimal places.) ABC Lyn Return on net sales: % k. Compute the return on total assets for both companies. (Round your answers to two decimal places.) Print Done ABC Lyn Return on total assets: 1. Compute the return on common shareholders' equity for both companies. (Round your answers to two decimal places.) ABC Lyn Return on common shareholders' equity m. Compute the earnings per share for both companies. (Round your answers to two decimal places.) Ivn Print Done Enter any number in the edit fields and then continue to the next question. More Info x Assume that you are purchasing shares in a company in the variety store and gas bar supply business. Suppose you have narrowed the choice to ABC Trading Ltd. and Lyn Corp. and have assembled the following data: (Click the icon to view the income statement data.) (Click the icon to view the balance sheet and market price data.) Your investment strategy is to purchase the shares of companies that have low pricelearnings ratios but appear to be in good shape financially. Assume you have analyzed all other factors, and your decision depends on th Required Udan TY, VUV W , Short-term investments 0 25,500 Current receivables, net 392,000 j. Compute the return on net sales for both companies. (Round your answers to two decimal places.) Inventories 322,000 424,000 25.500 460,000 28,000 ABC Prepaid expenses Lyn $ 915,500 $ 1,017,500 Return on net sales: Total current assets Income statement k. Compute the return on total assets for both companies. (Round your answers to two decimal places.) ABC Lyn Return on total assets % % 1. Compute the return on common shareholders' equity for both companies. (Round your answers to two decimal pl ABC Lyn Selected income statement data for the year ended December 31, 2020 ABC Trading Ltd. Lyn Corp. Net sales (all on credit) $ 1,068,000 $ 1,258,000 Cost of goods sold 614,000 740,000 Income from operations 200,000 212,000 Interest expense 42,000 12,000 Net income 83,000 140,000 Return on common shareholders' equity % m. Compute the earnings per share for both companies. (Round your answers to two decimal places.) ABC Lyn Total assets $ 2,078,000 $ 2,356,000 Total current liabilities 764,000 806,000 Total liabilities 1,444,000 1,524,000 Preferred shares, $10.00 (360 shares) 66,000 Common shares, (75,000 shares) 450,000 Common shares, (10,000 shares) 100,000 Total shareholders' equity 634,000 832,000 Market price per common share 91.00 $ 55.00 ABC's preferred dividends are paid each year, there are no dividends in arrears. Selected balance sheet data at January 1, 2020 ABC Trading Lyn Ltd. Corp. Current receivables, net $ 346.000 $ 284,000 Inventories 466,000 488,000 Total assets 1,988,000 1,736,000 Preferred shareholders' equity, $10.00 (360 shares) 66,000 Common shares, (75,000 shares) 450,000 (10,000 shares) 100,000 Total shareholders' equity 568,000 724,000 Earnings per share: Print Done n. Compute the pricelearnings ratio for both companies. (Round your answers to two decimal places.) ABC Lyn Price/earnings ratio: o. Compute the book value per common share for both companies. (Round your answers to two decimal places.) ABC Lyn Book value per common share: common shares seem to fit the investment strategy better. Its pricelearnings ratio is but There are a few troubling issues with but Print Done Enter any number in the edit fields and then continue to the next
