The Following Summaries from the Income Statements and Balance Sheets

question 83

Essay

The following summaries from the income statements and balance sheets of Kouris Company and Brittania,Inc.are presented below.
(1)For both companies for 2016,compute the:
(a)Current ratio
(b)Acid-test ratio
(c)Accounts receivable turnover
(d)Inventory turnover
(e)Days' sales in inventory
(f)Days' sales uncollected
Which company do you consider to be the better short-term credit risk? Explain.
(2)For both companies for 2016,compute the:
(a)Profit margin ratio
(b)Return on total assets
(c)Return on common stockholders' equity
Which company do you consider to have better profitability ratios?

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Definitions:

Perfect Competitor

An individual or company within a perfectly competitive market that cannot influence the market price and must accept the prevailing market price.

Long Run

In economics, a period in which all inputs and outputs can be varied, allowing for the adjustment of all factors of production.

Perfect Competitor

A theoretical market where no individual buyer or seller has the power to affect the price of goods, leading to an optimal allocation of resources.

Long Run

A period in economics sufficient for all markets to adjust, including prices, outputs, and wages, reflecting changes in economic conditions or policies.