Comparative financial statement data of McClaine Optical Mart follow: Other information: 1. Market price of McClaine common

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Comparative financial statement data of McClaine Optical Mart follow:

Comparative financial statement data of McClaine Optical Mart follow:

Other information:
1. Market price of McClaine common stock: $89.38 at December 31, 2014, and $85.67 at December 31, 2013
2. Common shares outstanding: 15,000 during 2014 and 10,000 during 2013
3. All sales on credit
Requirements
1. Compute the following ratios for 2014 and 2013:
a. Current ratio
b. Quick (acid-test) ratio
c. Receivables turnover and days€™ sales outstanding (DSO); round to nearest whole day
d. Inventory turnover and days€™ inventory outstanding (DIO); round to nearest whole day
e. Accounts payable turnover and days€™ payable outstanding (DPO); (use cost of goods sold in the turnover ratio and round DPO to nearest whole day
f. Cash conversion cycle (in days)
g. Times-interest-earned ratio
h. Return on assets; use DuPont Analysis
i. Return on common stockholders€™ equity; use DuPont Analysis
j. Earnings per share of common stock
k. Price-earnings ratio
2. Decide whether
(a) McClaine€™s financial position improved or deteriorated during 2014
(b) The investment attractiveness of McClaine€™s common stock appears to have increased or decreased.
3. How will what you learned in this problem help you evaluate aninvestment?

Cash Conversion Cycle
Cash conversion cycle measures the total time a business takes to convert its cash on hand to produce, pay its suppliers, sell to its customers and collect cash from its customers. The process starts with purchasing of raw materials from suppliers,...
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Financial Accounting

ISBN: 978-0133427530

10th edition

Authors: Walter Harrison, Charles Horngren, William Thomas

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