The Following Summaries from the Income Statements and Balance Sheets

question 46

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 2012, 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 2012, compute the
(a) Profit margin ratio
(b) Return on total assets
(c) Return on ordinary shareholders'equity
Which company do you consider to have better profitability ratios?

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