Given the following financial data for two firms in the computer industry. Balance Sheet (in thousands)...

 

  

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Given the following financial data for two firms in the computer industry. Balance Sheet (in thousands) XYZ Company $ 10 90 117 240 Cash A/R Inventory Plant/Equip. Total assets ABC Company $ 15 50 55 150 Current liabilities Bonds payable 270 57 75 457 $101 100 Common stock Retained earnings Total Sales Cost of goods sold Interest expense Income before taxes Net Income Tax rate ROA 9% ROE 15.5% 50 88 $270 ABC Income Statement (In thousands) $500 300 7 80 32 40% XYZ $700 475 8 $2.50 $70 105 42 40% Other Selected Data $2.50 $80 Dividends per share Market Price year end Computer Industry (Averages for 19x7) Current ratio 2.1 to 1 Acid-test (quick) 1.1 to 1 Inventory turnover 5 times Debt/Equity 55% Dividend Yield 2.2% 70 186 $457 Compute the following ratios for each company: 1) current 2) acid-test (quick) 3) inventory turnover 4) TIE 5) debt-to-equity ratio 6) ROA and 7) ROE. Using the ratios and the industry data, present conclusions regarding the attractiveness of the two companies? (14 pts) Given the following financial data for two firms in the computer industry. Balance Sheet (in thousands) XYZ Company $ 10 90 117 240 Cash A/R Inventory Plant/Equip. Total assets ABC Company $ 15 50 55 150 Current liabilities Bonds payable 270 57 75 457 $101 100 Common stock Retained earnings Total Sales Cost of goods sold Interest expense Income before taxes Net Income Tax rate ROA 9% ROE 15.5% 50 88 $270 ABC Income Statement (In thousands) $500 300 7 80 32 40% XYZ $700 475 8 $2.50 $70 105 42 40% Other Selected Data $2.50 $80 Dividends per share Market Price year end Computer Industry (Averages for 19x7) Current ratio 2.1 to 1 Acid-test (quick) 1.1 to 1 Inventory turnover 5 times Debt/Equity 55% Dividend Yield 2.2% 70 186 $457 Compute the following ratios for each company: 1) current 2) acid-test (quick) 3) inventory turnover 4) TIE 5) debt-to-equity ratio 6) ROA and 7) ROE. Using the ratios and the industry data, present conclusions regarding the attractiveness of the two companies? (14 pts)

Answer rating: 100% (QA)

To calculate the requested ratios well use the following formulas 1 Current Ratio Current Assets Current Liabilities 1 Acidtest Quick Ratio Current Assets Inventory Current Liabilities 1 Inventory Tur... View the full answer