Compute each of the following ratios for both jds and mls

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Reference no: EM13480811

Westfield Capital Management Co."s equity investment strategy is to invest in companies with low price-to-book ratios, while considering differences in solvency and asset utilization. Westfield is considering investing in the shares of either Jerry"s Departmental Stores ( JDS) or Miller Stores (MLS). Selected financial data for both companies follow:

SELECTED FINANCIAL DATA AS OF MARCH 31, 2006

($ millions)

JDS

MLS

Sales

$21,250

18500

Fixed assets

5700

5500

Short-term debt


1000

Long-term debt

2700

2500

Equity

6000

7500

Outstanding shares (in millions)

250

400

Stock price ($ per share)

51.5

49.5

Required:

a. Compute each of the following ratios for both JDS and MLS:

(1) Price-to-book ratio

(2) Total-debt-to-equity ratio

(3) Fixed-asset-utilization (turnover)

b. Select the company that better meets Westfield"s criteria.

Reference no: EM13480811

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