Concept explainers
Concept Introduction
Acid-Test Ratio: Acid-Test Ratio is a financial
Inventory Turnover: Inventory Turnover is a financial efficiency ratio that indicates how effectively and efficiently an organization manages its inventory. It measures how many times an organization sells and replaces its inventory during a period. It is calculated by dividing cost of goods sold by average inventory during a period.
Days’ Sales in receivables: Days’ Sales in receivables is a financial ratio that measures the average number of days that an organization takes to collect money on its accounts receivables. It is calculated by dividing net receivables by average net credit sales per day.
Debt Ratio: Debt ratio is a financial ratio that shows the percentage of total assets that is financed by the total liabilities of a company.
Earnings per Share: Earnings per Share (EPS) is a financial profitability ratio that measures the amount of net income available to common stockholders earned on one share. It is calculated by dividing net income available to common stockholders by the average (or weighted average) number of shares outstanding during a period.
Price Earnings Ratio: Price Earnings Ratio is a financial ratio for valuing a company’s stock in the market that shows what the investors are willing to pay for $1 of the company’s earnings. It is measured as a ratio of market price per share of a company’s stock to the earnings per share for a particular period.
Dividend Payout Ratio: Dividend Payout Ratio is a financial ratio that shows the percentage of a company’s earnings that is paid in the form of dividends. It is calculated by dividing dividend per share by earnings per share (EPS) for a particular period.
1.
To Compute: The given ratios for Best Digital Corp. and Very Zone, Inc. for the current year.
2.
A company’s stock that better fits the investment strategy.
Want to see the full answer?
Check out a sample textbook solution
Chapter 17 Solutions
ACCOUNTING PRINCIPLES 222 5/16 >C<
- If you give me wrong answer this financial accounting question I will give you unhelpful ratearrow_forwardExpert need your helparrow_forwardMercury Corp. has no debt outstanding and a total market value of $350,000. Earnings before interest and taxes (EBIT) are projected to be $60,000 if economic conditions are normal. If there is a strong expansion in the economy, then EBIT will be 22% higher. If there is a recession, then EBIT will be 28% lower. The company is considering a $180,000 debt issue with an interest rate of 7%. The proceeds will be used to repurchase shares of stock. There are currently 9,000 shares outstanding. Ignore taxes for questions a) and b). Assume the company has a market-to-book ratio of 1.0 and the stock price remains constant. Required: Calculate return on equity (ROE) under each of the three economic scenarios before any debt is issued.arrow_forward
- Solve with explanation and accounting questionarrow_forwardQuestion: Naina Inc's contribution margin ratio is 64% and its fixed monthly expenses are $44,500. Assuming that the fixed monthly expenses do not change, what is the best estimate of the company's net operating income in a month when sales are $131,000? Help me with thisarrow_forwardAccurate Answerarrow_forward
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education