Below you will find the condensed financial statements for Best Inc. and Good Inc. for 2019.

INSTRUCTIONS
1. Compute the following ratios for each company:
a. Rate of return on net sales
b. Rate of return on total assets at year-end
c. Rate of return on stockholders€™ equity at year-end
d. Earnings per share of common stock
e. Ratio of stockholders€™ equity to total equities
f. Current ratio
g. Asset turnover
h. Book value per share of common stock
2. Comment on any similarities or differences in the two companies€™ ratios. When possible, comment on the cause for these differences.
3. From the investor€™s point of view, is one company more at risk than the other?
4. Would you grant a five-year loan to either company? Explain.

Analyze: Assume that Good Inc. believes that it can cut the cost of goods sold by 5 percent in 2020 while keeping net sales and operating expenses at 2019 levels. If the company met this goal, discuss the potential implications to the rate of return on sales and earnings per share. Assume a tax rate of 25 percent.

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Income Statements Year Ended December 31, 2019 Best Inc. Good Inc. Sales (Net) Cost of Goods Sold Gross Profit Operating Expenses Net Income from Operations Interest Expense Net Income before Income Tax Income Tax Expense 700000 360000 340000 135000 205000 920000 580000 340000 200000 140000 | 10000 130000 205000 51250 |153750 Net Income after Income Tax 97500 Balance Sheets December 31, 2019 Best Inc. Good Inc. Assets 135000 235000 3기0101010 114 9 00 206000 3 20900 Current Assets Property, Plant, and Equipment (Net) Total Assets Liabilities and Stockholders' Equity Liabilities 108500 110000 2 18500 Current Liabilities 89800 Long-Term Liabilities (Bonds Payable) Total Liabilities 8 9800 Stockholders' Equity Common Stock ($10 Par Value) 30000 12 1500 15 1500 3 70000 30000 201100 231100 320900 Retained Earnings Total Stockholders' Equity Total Liabilities and Stockholders' Equity