Essay
The following are summaries from the income statements and balance sheets of Red Shoe,Inc.and Blue Shoe,Inc.
(1) For both companies compute the following ratios for 2014:
(a) Current ratio
(b) Acid-test ratio
(c) Accounts receivable turnover
(d) Inventory turnover
(e) Days' sales in inventory
(f) Days' sales uncollected
Which company do you consider to be the better short-term credit risk? Explain.
(2) For both companies compute the following ratios for 2014:
(a) Profit margin ratio
(b) Return on total assets
(c) Return on common stockholders' equity
Which company do you consider to have better profitability ratios?
Correct Answer:

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Blue Shoe has higher current r...View Answer
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Correct Answer:
Verified
Comment:
Blue Shoe has higher current r...
View Answer
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