Conduct financial analyses of the two companies

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Reference no: EM132421317

Problem: Following financial information is related to Glow Corporation and Blue Corporation:

                                                            Glow Corporation                   Blue Corporation

                                                            2001                2000                2001                2000

            Current ratios                          1.16                 .95                   2.25                 2.17

            Working capital                      $11                  ($2)                 $30                  $28

            A/R turnover                           31.7 times       45 times          30 times          30 times

            Inventory Turnover                 16.6 times       22.5 times       15 times          15 times

            Asset turnover                         2.4 times         3.2 times         3.6 times         3.8 times

            Total debt to total assets         86.9%             81.7%              14.2%              15.4%

            Sh. Equity to total assets        13.1%              18.3%              85.8%              84.6%

            Gross margin ratio                  30%                 33%                 25%                 25%

            Return on sales                       10%                 11.9%              10%                 10%

            Return on assets                      24.5%              38.5%              35.5%              38.5%

            Return on equity                     186.3%            210.5%            41.4$               45.5%

Required: Conduct financial analyses of the two companies on the basis of above data and deduct which is performing better and why?

Reference no: EM132421317

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