The Following Summaries from the Income Statements and Balance Sheets

question 96

Essay

The following summaries from the income statements and balance sheets of Neeko,Inc.and Saxony,Inc.are presented below.
(1)For both companies for 2014,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 2014,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?

---

Definitions:

Forced Distribution

A performance management system where employees are ranked in groups and a certain percentage must fall into each group.

Merit Pay

A pay system where employees are given bonuses or pay increases based on their performance, encouraging productivity and excellence.

Performance Appraisal

The formal assessment of an individual employee's job performance and productivity, usually involving feedback and documentation.

360-Degree Feedback

A performance appraisal system where employees receive confidential, anonymous feedback from the people who work around them.