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Data from the current year-end balance sheet: Assets Cash ***E *********** ******* Accounts receivable, net Notes receivable (trade) Merchandise inventory Prepaid expenses Plant and equipment, net ****** Total assets THE ***** ***** Datatech Sigma Company Company ************** $ 18,500 $33,000 36,400 56,400 8,100 6,200 83,440 131,500 4,000 5,950 284,000 303,400 $434,440 $536,450 Data from the current year's income statement: Sales Cost of goods sold Interest expense Income tax expense ******LTE **** ***E Datatech Sigma Company Company Net income ***** Basic earnings per share..... $660,000 $780,200 485,100 532,500 6,900 11,00C 12,800 19,300 67,770 105,000 1.94 2.56

Data from the current year-end balance sheet: Assets Cash ***E *********** ******* Accounts receivable, net Notes receivable (trade) Merchandise inventory Prepaid expenses Plant and equipment, net ****** Total assets THE ***** ***** Datatech Sigma Company Company ************** $ 18,500 $33,000 36,400 56,400 8,100 6,200 83,440 131,500 4,000 5,950 284,000 303,400 $434,440 $536,450 Data from the current year's income statement: Sales Cost of goods sold Interest expense Income tax expense ******LTE **** ***E Datatech Sigma Company Company Net income ***** Basic earnings per share..... $660,000 $780,200 485,100 532,500 6,900 11,00C 12,800 19,300 67,770 105,000 1.94 2.56

Financial Accounting: The Impact on Decision Makers
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter5: Inventories And Cost Of Goods Sold
Section: Chapter Questions
Problem 5.26MCE
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1. Compute the net profit margin, total asset turnover, return on total assets, and return on common stockholders’ equity for both companies.

2. Assume each company paid a cash dividend of $1.50 per share and that each company’s stock can be purchased at $25 a share. Compute each company’s price earnings ratio and dividend yield.

3. Identify which company’s stock you would recommend as the better investment and explain why.

Datatech Sigma Company Company Data from the current year-end balance sheet: Assets. Cash Accounts receivable, net Notes receivable (trade) Merchandise inventory Prepaid expenses Plant and equipment, net Total assets. $ 18,500 $33,000 36,400 8,100 56,400 6,200 83,440 131,500 4,000 5,950 284,000 303,400 $434,440 $536,450 Datatech Sigma Company Company Data from the current year's income statement: Sales Cost of goods sold Interest expense Income tax expense Net income Basic earnings per share.. $660,000 $780,200 485,100 6,900 12,800 67,770 1.94 532,500 11,000 19,300 105,000 2.56
Transcribed Image Text:Datatech Sigma Company Company Data from the current year-end balance sheet: Assets. Cash Accounts receivable, net Notes receivable (trade) Merchandise inventory Prepaid expenses Plant and equipment, net Total assets. $ 18,500 $33,000 36,400 8,100 56,400 6,200 83,440 131,500 4,000 5,950 284,000 303,400 $434,440 $536,450 Datatech Sigma Company Company Data from the current year's income statement: Sales Cost of goods sold Interest expense Income tax expense Net income Basic earnings per share.. $660,000 $780,200 485,100 6,900 12,800 67,770 1.94 532,500 11,000 19,300 105,000 2.56
Liabilities and Stockholders' Current liabilities.. Long-term notes payable. Common stock, $5 par value Retained earnings. Total liabilities and equity Datatech Sigma Company Company Equity $ 60,340 $92,300 79,800 100,000 175,000 205,000 119,300 139,150 $434,440 $536,450 Beginning-of-year data: Accounts receivable, net Notes receivable (trade). Merchandise inventory. Total assets Common stock, $5 par value Retained earnings ....... Datatech Sigma Company Company .$ 28,800 $ 53,200 0 0 54,600 106,400 388,000 372,500 175,000 205,000 94,300 90,600
Transcribed Image Text:Liabilities and Stockholders' Current liabilities.. Long-term notes payable. Common stock, $5 par value Retained earnings. Total liabilities and equity Datatech Sigma Company Company Equity $ 60,340 $92,300 79,800 100,000 175,000 205,000 119,300 139,150 $434,440 $536,450 Beginning-of-year data: Accounts receivable, net Notes receivable (trade). Merchandise inventory. Total assets Common stock, $5 par value Retained earnings ....... Datatech Sigma Company Company .$ 28,800 $ 53,200 0 0 54,600 106,400 388,000 372,500 175,000 205,000 94,300 90,600
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