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Question 6 Selected financial data for a recent year for two clothing competitors, Le Château Inc....

Question 6

Selected financial data for a recent year for two clothing competitors, Le Château Inc. and Reitmans (Canada) Limited, are presented here (in thousands, except share price):

Le Château Reitmans
Current assets $116,724 $319,362
Total assets 168,490 542,083
Current liabilities 36,038 121,172
Total liabilities 108,136 160,915
Loss to common shareholders (35,745) (24,703)
Share price $0.27 $3.96
Weighted average number of common shares 29,964 64,079

For each company, calculate the following values and ratios. Where available, industry averages are included in parentheses. (Round basic earnings per share to 2 decimal places, e.g. 5.25 and round all other amounts to 1 decimal places, e.g. 5.2 or 5.2%. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Do not leave any answer field blank. Enter 0 for not applicable amounts.)

1.Working capital (n/a)

2.Current ratio (1.8:1)

3.Debt to total assets (57%)

4.Basic earnings per share (n/a)

5.Price-earnings ratio (20.0 times)

Le Chateau:

Debt to total assets:_______% (the answer is NOT 0.428 or 42.8%)

Price-Earnings Ratio: ________ times. (the answer is NOT -0.23 times)

Reitmans:

Debt to total assets:_______% (the answer is NOT 7.3% or 0.073%)

Price-Earnings Ratio: ________ times. (the answer is NOT -10.42)

(I was given the wrong answer for the questions above from this website and would like some clarification)

business   accounting   
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Answer #1
Ans. Le Chateau :
Debt to total assets    =   Total liabilities / Total assets * 100
$108,136 / $168,490 * 100
64.2%
Price earnings ratio = Share price / Earnings per share
$0.27 / -$1.19
-0.2 times
Reitmans :
Debt to total assets    =   Total liabilities / Total assets * 100
$160,915 / $542,083 * 100
29.7%
Price earnings ratio = Share price / Earnings per share
$3.96 / -$0.39
-10.2 times
*Working Notes:
Earnings per share = Loss to common shareholders / Weighted average number of common shares
Le Chateau : -$35,745 / 29,964 -$1.19 per share
Reitmans -$24,703 / 64,079 -$0.39 per share
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