The following financial results are shown for Smith, Inc. and Jones, Inc. RatiosSmith, Inc.Jones, Inc.Current ratio2.31.9Acid test ratio1.2.9Accounts receivable turnover8.4 times6.8 timesInventory turnover4.7 times3.1 timesDays sales in inventory64 days799 daysDays sales uncollected 34.2 days39.7 daysProfit margin ratio3.2%4.8% Total asset turnover1.11.8 Return on common stockholder' equity 4.6%6.1% Price earnings ratio18.310.7Dividend yield.89%.90Debt ratio.62.47Times interest earned2.6 times6.2 times From the above financial data, prepare two separate memos. In the first memo, determine which of the two companies would be the better short-term credit risk and explain why. In the second memo, determine which of the two companies the better investment is and explain why. Your explanations must mention the exact ratios and numbers compared to support your choice. ******Answers and memos must be logically written and no grammatical errors.******* Memo #1: The company I selected as the better short-term credit risk is:__ Memo #2: The company I selected as the better investment is:_

The following financial results are shown for Smith, Inc. and Jones, Inc. RatiosSmith, Inc.Jones, Inc.Current ratio2.31.9Acid test ratio1.2.9Accounts receivable turnover8.4 times6.8 timesInventory turnover4.7 times3.1 timesDays sales in inventory64 days799 daysDays sales uncollected 34.2 days39.7 daysProfit margin ratio3.2%4.8% Total asset turnover1.11.8 Return on common stockholder' equity 4.6%6.1% Price earnings ratio18.310.7Dividend yield.89%.90Debt ratio.62.47Times interest earned2.6 times6.2 times From the above financial data, prepare two separate memos. In the first memo, determine which of the two companies would be the better short-term credit risk and explain why. In the second memo, determine which of the two companies the better investment is and explain why. Your explanations must mention the exact ratios and numbers compared to support your choice. Answers and memos must be logically written and no grammatical errors.* Memo #1: The company I selected as the better short-term credit risk is:__ Memo #2: The company I selected as the better investment is:_

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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