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:

Compounded Monthly

Interest calculation method where interest is added to the principal on a monthly basis, leading to interest on interest in subsequent months.

Monthly Investments

Regular investments made on a monthly basis, often part of a savings or investment strategy.

Compounded Annually

Describes interest that is calculated and added to the principal sum once per year.

Annual Investment

The amount of money that is invested or planned to be invested over the course of a year.