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Course Project 1 Explanation

Course Project 1 Explanation - Course Project Part 1(100...

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Course Project: Part 1 (100 points) (TCOs 1 and 2) Al Thomas has recently been approached by his brother-in-law, Robert Watson, with a proposal to buy a 20 percent interest in Watson Leisure Time Sporting Goods. The company manufactures golf clubs, baseball bats, basketball goals, and other similar items. Mr. Watson is quick to point out the increase in sales from 200X to 200Z as indicated in the income statement, Exhibit 1. A balance sheet for a similar time period is shown in Exhibit 2, and selected industry ratios are presented in Exhibit 3. The issue here is to determine if Watson Leisure Time Sporting Goods represents an attractive investment situation. Although Mr. Thomas has a primary interest in the profitability ratios, he will take a close look at all the ratios. He has no fast and firm rules about required return on investment, but rather wishes to analyze the overall condition of the firm. Referring to the income statement (Exhibit 1) and balance sheet (Exhibit 2), compute the ratios for 200X and 200Z using
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