Solution-How does company appear to be managing its

How does company appear to be managing its inventory

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Reference no: EM131795090

Selected ratios for 2015 for two companies in the office supply industry are presented below. Answer the questions that follow about Walker and Diesel. Each question is worth 3 marks each.

Ratio	Puck	Stick	Industry Average
Asset turnover	2.6x	2.2x	2.5x
Average collection period	31 days	35 days	36 days
Cash current debt coverage	0.3x	0.10x	0.20x
Current ratio	1.7:1	3.0:1	1.6:1
Debt to total assets	50%	30%	50%
Earnings per share	$3.50	$0.40	Not available
Gross profit margin	23%	40%	27%
Inventory turnover	6x	3x	5x
Payout ratio	8%	22%	10%
Price-earnings ratio	29x	45x	38x
Profit margin	5%	4%	4%
Return on assets	12%	8%	10%
Return on common shareholders' equity	25%	13%	16%
Times interest earned	4.2x	8.6x	7.1x

Comment on how successful each company appears to managing its accounts receivable. Terms are net 30 for both companies.
How well does each company appear to be managing its inventory?
Which company is more solvent?
The gross profit for Puck is lower than Stick's and the industries. Provide two reasons why this would be the case?
Which company would investors believe would have greater prospects for growing earning?

Reference no: EM131795090

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How does company appear to be managing its inventory

Reference no: EM131795090

Reference no: EM131795090

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