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Westfield Capital Management Co.'s equity investment strategy is to invest in companies with low price-to-book ratios, while considering differences in solvency and asset utilization. Westfield is considering investing in the shares of either Jerry's Departmental Stores (JDS) or Miller Stores (MLS). Selected financial data for both companies follow: SELECTED FINANCIAL DATA AS OF MARCH 31, 2006 JDS $21,250 5,700 ($ millions) Sales Fixed assets. Short-term debt. Long-term debt Equity Outstanding shares (in millions)... Stock price ($ per share). Required: a. Compute each of the following ratios for both JDS and MLS: (1) Price-to-book ratio (2) Total-debt-to-equity ratio (3) Fixed-asset-utilization (turnover) b. Select the company that better meets Westfield's criteria. 2,700 6,000 250 51.50 MLS $18,500 5,500 1,000 2,500 7,500 400 49.50

Westfield Capital Management Co.'s equity investment strategy is to invest in companies with low price-to-book ratios, while considering differences in solvency and asset utilization. Westfield is considering investing in the shares of either Jerry's Departmental Stores (JDS) or Miller Stores (MLS). Selected financial data for both companies follow: SELECTED FINANCIAL DATA AS OF MARCH 31, 2006 JDS $21,250 5,700 ($ millions) Sales Fixed assets. Short-term debt. Long-term debt Equity Outstanding shares (in millions)... Stock price ($ per share). Required: a. Compute each of the following ratios for both JDS and MLS: (1) Price-to-book ratio (2) Total-debt-to-equity ratio (3) Fixed-asset-utilization (turnover) b. Select the company that better meets Westfield's criteria. 2,700 6,000 250 51.50 MLS $18,500 5,500 1,000 2,500 7,500 400 49.50

FINANCIAL ACCOUNTING
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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Westfield Capital Management Co.’s equity investment strategy is to invest in companies with low price-to-book ratios, while considering differences in solvency and asset utilization. Westfield is considering investing in the shares of either Jerry’s Departmental Stores ( JDS) or Miller Stores (MLS). Selected financial data for both companies follow:

 

Required:

  1. ComputeeachofthefollowingratiosforbothJDSandMLS: (1) Price-to-bookratio
    (2) Total-debt-to-equityratio
    (3) Fixed-asset-utilization(turnover)

  2. Select the company that better meets Westfield’s criteria.

PROBLEM 3-5B Leases, Pensions, and Receivables Securitization Westfield Capital Management Co.'s equity investment strategy is to invest in companies with low price-to-book ratios, while considering differences in solvency and asset utilization. Westfield is considering investing in the shares of either Jerry's Departmental Stores (JDS) or Miller Stores (MLS). Selected financial data for both companies follow: SELECTED FINANCIAL DATA AS OF MARCH 31, 2006 JDS $21,250 5,700 ($ millions) Sales .. Fixed assets.. Short-term debt. Long-term debt Equity .. Outstanding shares (in millions)..... Stock price ($ per share). Required: a. Compute each of the following ratios for both JDS and MLS: (1) Price-to-book ratio (2) Total-debt-to-equity ratio (3) Fixed-asset-utilization (turnover) b. Select the company that better meets Westfield's criteria. 2,700 6,000 250 51.50 MLS $18,500 5,500 1,000 2,500 7,500 400 49.50
Transcribed Image Text:PROBLEM 3-5B Leases, Pensions, and Receivables Securitization Westfield Capital Management Co.'s equity investment strategy is to invest in companies with low price-to-book ratios, while considering differences in solvency and asset utilization. Westfield is considering investing in the shares of either Jerry's Departmental Stores (JDS) or Miller Stores (MLS). Selected financial data for both companies follow: SELECTED FINANCIAL DATA AS OF MARCH 31, 2006 JDS $21,250 5,700 ($ millions) Sales .. Fixed assets.. Short-term debt. Long-term debt Equity .. Outstanding shares (in millions)..... Stock price ($ per share). Required: a. Compute each of the following ratios for both JDS and MLS: (1) Price-to-book ratio (2) Total-debt-to-equity ratio (3) Fixed-asset-utilization (turnover) b. Select the company that better meets Westfield's criteria. 2,700 6,000 250 51.50 MLS $18,500 5,500 1,000 2,500 7,500 400 49.50
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