2. Below are the financial statements of two companies operating in the same industry

2.1 Assess their asset management performance and short-term liquidity position using appropriate financial ratios. (10 points) 2.2 Both companies pay dividends of $5.20 per share and their stock prices are both at $102.50. Evaluate these companies from the perspective of an investor using appropriate financial ratios. (10 points)

Data from the current year's income statement \begin{tabular}{lrr} Sales & 1,052,500 & 1,203,000 \\ Cost of goods sold & 800,000 & 864,500 \\ Interest expense & 11,000 & 18,000 \\ Income tax expense & 20,000 & 33,000 \\ Net income & 221,500 & 287,500 \\ Basic earnings per share & 4.50 & 5.11 \\ \multicolumn{1}{r|}{ Beginning-of-year balance sheet data } & & \\ & & 74,000 \\ Accounts receivable, net & 40,500 & - \\ Current notes receivable (trade) & 5,000 & 147,000 \\ Merchandise inventory & 744,000 & 523,000 \\ Total assets & 246,000 & 281,500 \\ Common stock, $5 par value & 134,500 & 128,000 \end{tabular} Carbon Company Yanky Company Data from the current year's balance sheet Assets Cash Accounts receivable, net Current notes receivable (trade) Merchandise inventory Prepaid expenses Plant assets, net Total assets Liabilities and Equity Current liabilities Long-term notes payable Common stock, $5 par value Retained earnings Total liabilities and equity \begin{tabular}{rr|} 84,000 & 127,500 \\ 110,500 & 138,000 \\ 246,000 & 281,500 \\ 168,500 & 194,500 \\ \hline 609,000 & 741,500 \\ \hline \end{tabular} Data from the current year's income statement \begin{tabular}{lrr} Sales & 1,052,500 & 1,203,000 \\ Cost of goods sold & 800,000 & 864,500 \\ Interest expense & 11,000 & 18,000 \\ Income tax expense & 20,000 & 33,000 \\ Net income & 221,500 & 287,500 \\ Basic earnings per share & 4.50 & 5.11 \\ \multicolumn{1}{r|}{ Beginning-of-year balance sheet data } & & \\ & & 74,000 \\ Accounts receivable, net & 40,500 & - \\ Current notes receivable (trade) & 5,000 & 147,000 \\ Merchandise inventory & 744,000 & 523,000 \\ Total assets & 246,000 & 281,500 \\ Common stock, $5 par value & 134,500 & 128,000 \end{tabular} Carbon Company Yanky Company Data from the current year's balance sheet Assets Cash Accounts receivable, net Current notes receivable (trade) Merchandise inventory Prepaid expenses Plant assets, net Total assets Liabilities and Equity Current liabilities Long-term notes payable Common stock, $5 par value Retained earnings Total liabilities and equity \begin{tabular}{rr|} 84,000 & 127,500 \\ 110,500 & 138,000 \\ 246,000 & 281,500 \\ 168,500 & 194,500 \\ \hline 609,000 & 741,500 \\ \hline \end{tabular}