Problem

Selected data from the financial statements of Italian Marble Co. and Brazil Stone Product...

Selected data from the financial statements of Italian Marble Co. and Brazil Stone Products for the year just ended follow. Assume that for both companies dividends declared were equal in amount to net earnings during the year and therefore stockholders’ equity did not change. The two compa­nies are in the same line of business.

 

Italian Marble Co.

Brazil Stone Products

Total liabilities

$ 200,000

$ 100,000

Total assets

800,000

400,000

Sales (all on credit)

1,800,000

1,200,000

Average inventory

240,000

140,000

Average receivables

200,000

100,000

Gross profit as a percentage of sales

40%

30%

Operating expenses as a percentage of sales

36%

25%

Net income as a percentage of sales

3%

5%

Compute the following tor each company and state a brief conclusion about which company is in the stronger financial position.

a. Net income.


b. Net income as a percentage of stockholders’ equity.


c. Accounts receivable turnover;


d. Inventory turnover:

Step-by-Step Solution

Request Professional Solution

Request Solution!

We need at least 10 more requests to produce the solution.

0 / 10 have requested this problem solution

The more requests, the faster the answer.

Request! (Login Required)


All students who have requested the solution will be notified once they are available.
Add your Solution
Textbook Solutions and Answers Search