Below are current year financial statements for two companies in the same indust

Question

Below are current year financial statements for two companies in the same industries and direct competitors. Both companies have been in operation approximately the same length of time. Company A Company B Balance Sheet Cash 31,000 16,000 Accounts receivable (net) 29,000 24,000 Inventory 87,000 29,000 Property and equipment, net 125,000 394,000 Other assets 79,000 298,000 Total assets 351,000 761,000 Current liabilities 91,000 47,000 Long-term debt (5% interest) 62,000 58,000 Capital stock ($5 par) 145,000 505,000 Contributed capital in excess of par 18,000 103,000 Retained earnings 35,000 48,000 Total liabilities and stockholders

Explanation / Answer

company A company B profit margin 9.07% 11.88% fixed asset turnover ratio 3.61 2.028 Cash 0.34 0.34 current 1.615 1.468 Quick 0.66 0.85 receivable turnover 15.58 32.29 inventory turnover 5.19 27.55 debt to equity 0.773 0.16 ROE 0.207 0.145 EPS 1.41 0.94 P/E 11.35 13.83

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