New Corporation an up-and-coming biotech company, provides the following selected financial statement information. Financial information for Benchmark Corporation a well-established biotech company whose financial ratios represent the gold-standard in the industry, is also provided. Cash and cash equivalents Short-term investments Accounts receivable Property, plant and equipment Intangible assets Long-term investments Total asset Total liabilities New Corporation 2024 2023 2824 Benchmark Corporation 2023 $ 350,656 490,545 32,588 852,459 $ 238,446 $ 4,207,872 353,192 23,137 588,197 9,320,355 782,112 18,754,098 $ 3,997,478 8,947,541 766,470 17,816,393 2,565,875 1,545,856 1,796,113 1,082,099 41,054,000 46,375,680 4,081,184 571,366 3,509,819 120 494,117 45787,764 74,706,353 $ 245,253,656 88,291,316 1,373,633 1,670,881 39,822,380 45,448,166 116,798,428 43,215,419 73,583,010 $ 240,348,583 84,122,004 1,361,286 1,523,080 S Total stockholders' equity 5,837,979 875,697 4,962,282 Net sales Operating income Interest expense Investment income $ 7,865,315 1,179,797 39,406 81,456 $ 5,112,455 1,610,423 26,569 45,929 Required: 1. Calculate the cash holdings ratio for both companies. What conclusions do you draw about the cash holdings of New Corporation? 2. Calculate the investment-to-assets ratio for both companies. What conclusions do you draw about the New Corporation level of investment? 3. Calculate the return on investments ratio for both companies. What conclusions do you draw about the riskiness of New Corporation Investments?
New Corporation an up-and-coming biotech company, provides the following selected financial statement information. Financial information for Benchmark Corporation a well-established biotech company whose financial ratios represent the gold-standard in the industry, is also provided. Cash and cash equivalents Short-term investments Accounts receivable Property, plant and equipment Intangible assets Long-term investments Total asset Total liabilities New Corporation 2024 2023 2824 Benchmark Corporation 2023 $ 350,656 490,545 32,588 852,459 $ 238,446 $ 4,207,872 353,192 23,137 588,197 9,320,355 782,112 18,754,098 $ 3,997,478 8,947,541 766,470 17,816,393 2,565,875 1,545,856 1,796,113 1,082,099 41,054,000 46,375,680 4,081,184 571,366 3,509,819 120 494,117 45787,764 74,706,353 $ 245,253,656 88,291,316 1,373,633 1,670,881 39,822,380 45,448,166 116,798,428 43,215,419 73,583,010 $ 240,348,583 84,122,004 1,361,286 1,523,080 S Total stockholders' equity 5,837,979 875,697 4,962,282 Net sales Operating income Interest expense Investment income $ 7,865,315 1,179,797 39,406 81,456 $ 5,112,455 1,610,423 26,569 45,929 Required: 1. Calculate the cash holdings ratio for both companies. What conclusions do you draw about the cash holdings of New Corporation? 2. Calculate the investment-to-assets ratio for both companies. What conclusions do you draw about the New Corporation level of investment? 3. Calculate the return on investments ratio for both companies. What conclusions do you draw about the riskiness of New Corporation Investments?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:New Corporation an up-and-coming biotech company, provides the following selected financial statement information. Financial
information for Benchmark Corporation a well-established biotech company whose financial ratios represent the gold-standard in the
industry, is also provided.
Cash and cash equivalents
Short-term investments
Accounts receivable
Property, plant and equipment
Intangible assets
Long-term investments
Total asset
Total liabilities
New Corporation
2024
2023
2824
Benchmark Corporation
2023
$ 350,656
490,545
32,588
852,459
$ 238,446
$ 4,207,872
353,192
23,137
588,197
9,320,355
782,112
18,754,098
$ 3,997,478
8,947,541
766,470
17,816,393
2,565,875
1,545,856
1,796,113
1,082,099
41,054,000
46,375,680
4,081,184
571,366
3,509,819
120 494,117
45787,764
74,706,353
$ 245,253,656
88,291,316
1,373,633
1,670,881
39,822,380
45,448,166
116,798,428
43,215,419
73,583,010
$ 240,348,583
84,122,004
1,361,286
1,523,080
S
Total stockholders' equity
5,837,979
875,697
4,962,282
Net sales
Operating income
Interest expense
Investment income
$ 7,865,315
1,179,797
39,406
81,456
$ 5,112,455
1,610,423
26,569
45,929
Required:
1. Calculate the cash holdings ratio for both companies. What conclusions do you draw about the cash holdings of New
Corporation?
2. Calculate the investment-to-assets ratio for both companies. What conclusions do you draw about the New Corporation level of
investment?
3. Calculate the return on investments ratio for both companies. What conclusions do you draw about the riskiness of New
Corporation Investments?
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