Problem: Please review the following 6 ratios for Simpson Company and ABC Inc. for the year ended 2014, and address the 2 questions below.
|
Ratio Name
|
Simpson Company
|
ABC Inc.
|
|
(a) Days' sales outstanding
|
36
|
30
|
|
(b) Inventory turnover
|
5.6
|
4.9
|
|
(c) Asset turnover
|
2.02
|
3.03
|
|
(d) Earnings per share
|
$1.50
|
$1.25
|
|
(e) Times-interest-earned
|
6.1
|
5.2
|
|
(f) Return on common stockholders' equity
|
15.60%
|
12.20%
|
Required:
(1) Explain the meaning of each of the Simpson Company ratios above.
(2) State which company performed better for each ratio.