Reference no: EM13897004

Summary information from the financial statements of two companies competing in the same industry follows.

Required:
1. For both companies compute the 
(a) Current ratio, 
(b) Acid test ratio, 
(c) Accounts ( including notes) receivable turnover, 
(d) Inventory turnover, 
(e) Days sales in inventory, and (f) Days sales uncollected. 
Identify the company you consider to be the better short term credit risk and explain why. Round to one decimal place. 
2. For both companies compute the 
(a) Profit margin ratio, 
(b) Total asset turnover, 
(c) Return on total assets, 
(d) Return on common stockholders equity. Assuming that each company paid cash dividends of $ 1.50 per share and each companys stock can be purchased at $ 25 per share, compute their 
(e) Price earnings ratios 
(f) Dividend yields. Round to one decimal place, except for part b round to two decimals. 
Identify which companys stock you would recommend as the better investment and explainwhy.