Problem
Review the following 6 ratios for Langley Company and XYZ Inc. for the year ended 2014, and address the 2 questions below.
|
Ratio Name
|
Langley Company
|
XYZ Inc.
|
|
(a) Rate of return on total assets
|
21.5%
|
17.9%
|
|
(b) Debt ratio
|
25.0%
|
10.1%
|
|
(c) Accounts receivable turnover
|
8.3
|
7.5
|
|
(d) Price-Earnings ratio
|
25
|
19
|
|
(e) Inventory turnover
|
6.1
|
5.2
|
|
(f) Current ratio
|
1.96
|
3.12
|
Instructions: This is a 2-part question.
(1) Explain the meaning of each of the Langley Company ratios above.
(2) State which company performed better for each ratio.