35. Given the financial statements for Jones Corporation and Smith Corporation:

a. To which company would you, as credit manager for a supplier, approve the extension of (short-term) trade credit? Why? Compute all ratios before answering.

b. In which one would you buy stock? Why?

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JONES CORPORATION Current Assets Liabilities Cash Accounts receivable Inventory. $ 20,000 80,000 Accounts payable Bonds payable (long term) $100,000 80,000 50,000 Long-Term Assets Stockholders' Equity Fixed assets $ 500,000 Common stock $150,000 Less: Accumulated Paid-in capital 70,000 depreciation *Net fixed assets. Total assets Sales (on credit) Cost of goods sold Gross profit... *Selling and administrative expense. Less: Depreciation expense Operating profit. (150,000) Retained earnings. 100,000 350,000 Total liabilities and equity $500,000 $ 500,000 $1,250,000 750,000 500,000 257,000 50,000 193,000 Interest expense 8,000 Earnings before taxes 185,000 Tax expense 92,500 Net income $ 92,500 *Use net fixed assets in computing fixed asset turnover. Includes $7,000 in lease payments.