Condensed financial statements for ABC Corp. and XYZ Corp. for 2016 follow: INSTRUCTIONS 1. Compute the following

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Condensed financial statements for ABC Corp. and XYZ Corp. for 2016 follow:

Condensed financial statements for ABC Corp. and XYZ Corp. for

INSTRUCTIONS
1. Compute the following ratios for each company:
a. Rate of return on net sales
b. Rate of return on total assets at end of year
c. Rate of return on stockholders' equity at end of year
d. Earnings per share of common stock
e. Ratio of stockholders' equity to total equities
f. Current ratio
g. Asset turnover
h. Book value per share of common stock
2. Comment on the similarities and differences in the ratios computed for the two companies, pointing out the major factor that causes differences.
3. In which corporation would stock ownership be riskier? Explain.

Condensed financial statements for ABC Corp. and XYZ Corp. for

4. Would you consider the extension of short-term credit to ABC Corp. or XYZ Corp. riskier? Explain.

Analyze:
What percentage of net sales was expended for operating expenses by ABC Corp.? By XYZ Corp.?

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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College Accounting Chapters 1-30

ISBN: 978-0077862398

14th edition

Authors: John Price, M. David Haddock, Michael Farina

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