Developing Financial Ratios You have obtained the financial statements of A-Tec and Bi-Sci, new companies in the high-tech industry. Both companies have just completed their second year of operations. You have acquired the following information for an analysis of the companies. All dollar amounts are stated in thousands.

a. Calculate the following ratios for the 2 companies for the 2 years:
1. Current ratio.
2. Working capital (dollar amount).
3. Accounts receivable turnover.
4. Inventory turnover.
5. Asset turnover.
6. Long-term debt to total assets.
7. Debt to equity.
8. Gross margin percentage.
9. Net income margin.
10. Return on assets.

b. Write a brief analysis of the companies based on the information given and the ratios computed. Be sure to touch on issues of liquidity, solvency, leverage, and profitability.
Which company appears to be the better investment for a stockholder? Explain. Which company appears to be the better credit risk for a lender? Explain.

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A-Tech 2002 2001 Bi-Sci 2002 2001 Cash and cash equivalents Accounts receivable (net) 30 Inventory 40 40 $ 3 $ 2 $ 1 $1 15 20 20 20 30 30 Other current assets 5 1 3 1 Current liabilities 67 40 24 24 Property, plant & equip. (net) 310 170 115 104 Long-term debt 270 130 0 0 Sales (all credit sales) 950 675 600 600 Cost of goods sold 665 450 450 450 Net income Owners' equity 95 80 60 60 51 38 145 132