Share price year-end Income tax rate Dividends declared and paid Shares Outstanding Profitability ratios: Ratio Gross profit percentage Profit margin Earnings per share Asset turnover ratios Fixed Asset turnover Receivables turnover Inventory turnover Liquidity ratios: Current ratio The companies are in the same line of business and are direct competitors in a large metropolitan area. Both have been in business approximately ten years, and each has had steady growth. The management of each has a different viewpoint in many respects. Blair Company is more conservative, and as its president said, "We avoid what we consider to be undue risk." Neither company is publicly held. Armstrong Company has an annual audit by an independent auditor, but Blair Company does not. Market tests: > Required: 1. Complete a schedule that reflects a ratio analysis of each company. Use ending balances if average balances are not available. (Round intermediate calculations and final answers to 2 decimal places.) HINT: To calculate Current Ratio, you will need to first calculate the total Current Assets. Armstrong Company Blair Company $ Price/earnings ratio Dividend yield ratio 18. 30% 46,000 15,000 11.00 % % per share times times times % > 15 30% $250,000 50,000 12.00 % per share times times times ►
Share price year-end Income tax rate Dividends declared and paid Shares Outstanding Profitability ratios: Ratio Gross profit percentage Profit margin Earnings per share Asset turnover ratios Fixed Asset turnover Receivables turnover Inventory turnover Liquidity ratios: Current ratio The companies are in the same line of business and are direct competitors in a large metropolitan area. Both have been in business approximately ten years, and each has had steady growth. The management of each has a different viewpoint in many respects. Blair Company is more conservative, and as its president said, "We avoid what we consider to be undue risk." Neither company is publicly held. Armstrong Company has an annual audit by an independent auditor, but Blair Company does not. Market tests: > Required: 1. Complete a schedule that reflects a ratio analysis of each company. Use ending balances if average balances are not available. (Round intermediate calculations and final answers to 2 decimal places.) HINT: To calculate Current Ratio, you will need to first calculate the total Current Assets. Armstrong Company Blair Company $ Price/earnings ratio Dividend yield ratio 18. 30% 46,000 15,000 11.00 % % per share times times times % > 15 30% $250,000 50,000 12.00 % per share times times times ►
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter15: Financial Statement Analysis
Section: Chapter Questions
Problem 20BEA: The income statement, statement of retained earnings, and balance sheet for Somerville Company are...
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Financial Ratios
A Ratio refers to a figure calculated as a reference to the relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, or the number of times. When the number is determined by taking two accounting numbers derived from the financial statements, it is termed as the accounting ratio.
Return on Equity
The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.
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