A.

𝒄𝒖𝒓𝒓𝒆𝒏𝒕 𝒓𝒂𝒕𝒊𝒐 = 𝒄𝒖𝒓𝒓𝒆𝒏𝒕 𝒂𝒔𝒔𝒆𝒕𝒔

𝒄𝒖𝒓𝒓𝒆𝒏𝒕 𝒍𝒊𝒂𝒃𝒊𝒍𝒊𝒕𝒊𝒆𝒔

Xyz company ABC Company

Current asset 200,000 = 1.33:1 350,000 = 175:1
Current liability 150,000 200,000

B. 𝐴𝑐𝑖𝑑 − 𝑇𝑒𝑠𝑡 𝑟𝑎𝑡𝑖𝑜 = 𝑐𝑎𝑠ℎ + 𝑠ℎ𝑜𝑟𝑡 𝑡𝑒𝑟𝑚 𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 + 𝑟𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒𝑠 𝑛𝑒𝑡

𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

Xyz Company
Cash + receivables net 50,000 + short term invt + 100,000 = 1:1
Current liability 100,000

Abc Company
Cash + receivables net 50,000 + short term invt + 200,000 =1.25:1
Current liability 200,000

C. 𝐀𝐜𝐜𝐨𝐮𝐧𝐭𝐬 𝐑𝐞𝐜𝐞𝐢𝐯𝐚𝐛𝐥𝐞 𝐓𝐮𝐫𝐧𝐨𝐯𝐞𝐫 𝑵𝒆𝒕 𝒄𝒓𝒆𝒅𝒊𝒕 𝒔𝒂𝒍𝒆𝒔

𝑨𝒗𝒆𝒓𝒂𝒈𝒆 𝒏𝒆𝒕 𝒂𝒄𝒄𝒐𝒖𝒏𝒕 𝒓𝒆𝒄𝒆𝒊𝒗𝒂𝒃𝒍𝒆

Net credit sales 200,000 = 0.50 300,000 = 0.75
Average net account receivable 100,000 200,000

D. 𝑰𝒏𝒗𝒆𝒏𝒕𝒐𝒓𝒚 𝑻𝒖𝒓𝒏𝒐𝒗𝒆𝒓 = 𝑪𝒐𝒔𝒕 𝒐𝒇 𝑮𝒐𝒐𝒅𝒔 𝑺𝒐𝒍𝒅

𝑨𝒗𝒆𝒓𝒂𝒈𝒆 𝑰𝒏𝒗𝒆𝒏𝒕𝒐𝒓y (beg inv. +end. Inv. /2)
Xyz company Abc Company

Cost of goods sold 100,000 = 2 times 150,000 = 1.5 times

Average inventory 50,000 100,000

E. Accounts receivable turnover ratio = 365/ARTO

F. 𝑷𝒓𝒐𝒇𝒊𝒕 𝒎𝒂𝒓𝒈𝒊𝒏 = N𝐞𝐭 𝒊𝒏𝒄𝒐𝒎𝒆
Net sales

Xyz company Abc Company

Net income 30,000 = 0.15 42,000 = 0.14
Net sales 200,000 300,000
 G. 𝑨𝒔𝒔𝒆𝒕 𝑻𝒖𝒓𝒏𝒐𝒗𝒆𝒓 = 𝑵𝒆𝒕 𝒔𝒂𝒍𝒆𝒔

𝑨𝒗𝒆𝒓𝒂𝒈𝒆 𝒂𝒔𝒔𝒆𝒕𝒔

 Asset turnover measures how efficiently a company uses its assets to generate sales.

Xyz company Abc

Company
Net sales 200,000 = 0.44 300,000 =
0.41
Average assets 450,000 725,000

H. Return On Asset = Net income

Average Asset

 An overall measure of profitability is return on assets.

Xyz company Abc Company

Net income 30,000 = 0.066 42,000 = 0.057
Average Asset 450,000 725,000

I. Return On Equity = 𝑵𝒆𝒕 𝑰𝒏𝒄𝒐𝒎𝒆 − 𝑷𝒓𝒆𝒇𝒆𝒓𝒆𝒏𝒄𝒆 𝑫𝒊𝒗𝒊𝒅𝒆𝒏𝒅

𝑨𝒗𝒆𝒓𝒂𝒈𝒆 𝑶𝒓𝒅𝒊𝒏𝒂𝒓𝒚 𝑺𝒉𝒂𝒓𝒆𝒉𝒐𝒍𝒅𝒆𝒓𝒔 𝑬𝒒𝒖𝒊𝒕𝒚

Xyz company Abc Company

Net income 30,000 = 0.15 40,000 = 0.14
Shareholders’ equity 200,000 300,000

 The Preference dividend is not given

J. Earnings per share = 𝑵𝒆𝒕 𝑰𝒏𝒄o𝒎𝒆 − 𝑷𝒓𝒆𝒇𝒆𝒓𝒆𝒏𝒄𝒆 𝑫𝒊𝒗𝒊𝒅𝒆𝒏𝒅𝒔

𝑾𝒆𝒊𝒈𝒉𝒕𝒆𝒅 − 𝑨𝒗𝒆𝒓𝒂𝒈𝒆 𝑶𝒓𝒅𝒊𝒏𝒂𝒓𝒚 𝑺𝒉𝒂𝒓𝒆𝒔 𝑶𝒖𝒕𝒔𝒕𝒂𝒏𝒅𝒊𝒏g

 The Preference dividend is not given

K. Price-Earnings Ratio = 𝑴𝒂𝒓𝒌e𝒕 𝒑𝒕𝒊𝒄𝒆 𝒑𝒆𝒓 𝒔𝒉𝒂𝒓𝒆

𝑬𝒂𝒓𝒏𝒊𝒏𝒈 𝒑𝒆𝒓 𝒔𝒉𝒂𝒓e

 Market price per share and earning per share is not given

L. Pay-Out Ratio = 𝑪𝒂𝒔𝒉 𝒅𝒊𝒗𝒊𝒅𝒏𝒅𝒔

𝑵𝒆𝒕 𝒊𝒏𝒄𝒐𝒎e

 Both Xyz and Abc Company Cash dividends are not given
 M. Debt To Total Assets = Total debt / total assets

Xyz company Abc Company

Total debt 250,000 = 0.55 425,000 = 0.58

Total Assets 450,000 725,000

N. Times Interest Earned = 𝑰𝒏𝒄𝒐𝒎𝒆 𝑩𝒆𝒇𝒐𝒓𝒆 𝑰𝒏𝒄𝒐𝒎e 𝑻𝒂𝒙𝒆𝒔 𝒂𝒏𝒅 𝑰𝒏𝒕𝒆𝒓𝒆𝒔𝒕 𝑬𝒙𝒑𝒆𝒏𝒔𝒆
𝑰𝒏𝒕𝒆𝒓𝒆𝒔𝒕 𝑬𝒙𝒑𝒆𝒏𝒔e

Xyz company Abc Company

60,000 + 10,000 = 7 90,000 + 20,000 = 5.5
10,000 20,000