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).... .... 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).... .... 2,700 6,000 250 51.50 MLS $18,500 5,500 1,000 2,500 7,500 400 49.50

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter5: Evaluating Operating And Financial Performance

Section: Chapter Questions

Problem 8EP

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Question

Use following attachment of Westfield to answer this

a) Compute each of the following ratios for both JDS and MLS:

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

b) Select the company that better meets Westfield's criteria.

ROBLEM 3-5B
Leases, Pensions,
nd Receivables
ecuritization
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).
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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