Q AA RX ... Compute the following: (1) current ratio, (2) acid-test ratio, (3) days' sales uncollected, (4) inventory turnover, (5) days' sales in inventory, (6) debt-to-equity ratio, (7) times interest earned, (8) profit Financial and Managerial . . margin ratio, (9) total asset turnover, (10) return on total assets, and (11) return on equity. Round to one decimal place; for part 6, round to two decimals. Accounting Check Acid-test ratio, 1.6 to 1; Inventory turnover, 15.3 John J. Wild Problem 13-5B Comparative ratio analysis P3 Expand | Collapse Summary information from the financial statements of two companies competing in the same industry follows. 17 Activity-Based Costing and Analysis 666 Fargo Ball Fargo Ball Company Company company Company 18 Cost Behavior and Cost-Volume-Profit Analysis 704 Data from the current year-end balance sheets Data from the current year's income statement Assets Sales. . . $393,600 $667,500 Cash. ....... $ 20,000 $ 36,500 Cost of goods sold. 290,60 480,000 19 Variable Costing and Analysis 740 Accounts receivable, net . 88,700 79,500 Interest expense . . . . . . . 5,900 12,300 Merchandise inventory. .. 86,800 82,000 Income tax expense . . . . . . . . . 5,700 12,300 20 Master Budgets and Planning 772 Prepaid expenses. .. 9,700 10,100 Net income . 33,850 61,70 Plant assets, net .. 176,900 252,300 Basic earnings per share. . . 1.27 2.19 Total assets . . $382,100 $460,400 21 Flexible Budgets and Standard Costs 820 Liabilities and Equity Beginning-of-year balance sheet data Current liabilities. . $ 90,500 $ 97,000 Accounts receivable, net. .. $ 72,200 $ 73,300 22 Performance Measurement and Responsibility 864 Long-term notes payable 93.000 93,300 Merchandise inventory . 105, 100 80,500 Accounting Common stock, $5 par value. . 133,000 141,000 Total assets ... 383,400 443,000 Retained earnings. . 65.600 129,100 Common stock, $5 par value. 133,000 141,000 23 Relevant Costs for Managerial Decisions 902 Total liabilities and equity. $382,100 $460,400 Retained earnings . 49,100 109,700 24 Capital Budgeting and Investment Analysis 932 Required 1. For both companies compute the (a ) current ratio, (b ) acid-test ratio, (c ) accounts receivable turnover, (d ) inventory turnover, (e ) days' sales in inventory, and (f ) days' sales uncollected. Glossary G-1 Round to one decimal place. Identify the company you consider to be the better short-term credit risk and explain why. 2. For both companies compute the (a ) profit margin ratio, (b ) total asset turnover, (c ) return on total assets, and (d ) return on equity. Assuming that each company paid cash dividends of $1.50 Appendix 4D 4-D per share and each company's stock can be purchased at $25 per share, compute their (e ) price-earnings ratios and (f ) dividend yields. Round to one decimal place; for part b , round to two decimals. Identify which company's stock you would recommend as the better investment and explain why. Appendix A Financial Statement Information A A1 page 230 Problem 13-6B4 Appendix B Time Value of Money B-1 B-1 Income statement computations and format 42 Appendix C Investments C-1 C-1 Selected account balances from the adjusted trial balance for Harbor Corp. as of its calendar year-end December 31 follow. Appendix D Lean Principles and Accounting D-1 D- 1 Debit Credit