Question

This problem uses the same data as problem, but it can be solved independently. Price-Break and Low-Cost are both discount store chains. Condensed income statements and balance sheets for the two companies are shown in Exhibit. Amounts are in thousands.



Additional information follows:
• Cash dividends per share: Price-Break, $2.10; Low-Cost, $1.50
• Market price per share: Price-Break, $50; Low-Cost, $35
• Average shares outstanding for 20X9: Price-Break, 15 million; Low-Cost, 8 million
1. Compute the following ratios for both companies for 20X9:
(a) Current,
(b) Quick,
(c) Accounts receivable turnover,
(d) Inventory turnover,
(e) Total-debt-to-total-assets,
(f) Total-debt-to-total-equity,
(g) ROE,
(h) Gross profit rate,
(i) Return on sales,
(j) Total asset turnover,
(k) Pretax return on assets,
(l) EPS, (m) P-E,
(n) Dividend-yield,
(o) Dividend-payout.
Total debt includes all liabilities. Assume all sales are on credit.
2. Compare the liquidity, solvency, profitability, market price, and dividend ratios of Price-Break with those ofLow-Cost.


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  • CreatedFebruary 20, 2015
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