Agnes Ball is considering an investment in the common stock of a chain of retail department stores. She has narrowed her choice to two retail companies, Fast Corporation and Style Corporation, whose income statements and balance sheets are presented on the next page(Attached document). During the year, Fast Corporation paid a total of $50,000 in dividends. The market price per share of its stock is currently $60. In corporation, Style Corporation paid a total of $114,000 in dividends, and the current market price of its stock is $76 per share. Fast Corporation had net cash flows from operations of $271,500 and net capital expenditures of $625,000. Style Corporation had net cash flows from operations of $492,500 and net capital expenditures of $1,050,000. Information for prior years is not readily available. Assume that all notes payable are current liabilities and all bonds payable are long-term liabilities and that there is no change in inventory. Required Conduct a comprehensive ratio analysis for each company, using the available information. Compare the results. Round percentages and ratios to one decimal place, and consider changes of 0.1 or less to be intermediate. 1. Prepare a liquidity analysis by calculating for each company the (a)current ratio, (b)quick ratio, (c)receivable turnover, (d)days' sales uncollected, (e)inventory turnover, (f)days' inventory on hand, (g) payables turnover, and (h)days' payable. 2. Prepare a profitability analysis by calculating for each company the (a)profit margin, (b)asset turnover, (c)return on assets, and (d)return on equity. 3.Prepare a long-term solvency analysis by calculating for each company the (a)debt to equity ratio and (b)interest coverage ratio. 4. Prepare a cash flow adequacy analysis by calculating for each company the (a)cash flow yield, (b)cash flow to sales, (c)cash flows to assets, and (d)free cash flow. 5. Prepare an analysis of market strength by calculating for each company the (a)price/earnings(P/E)ratio and (b)dividends yield. 6. Compare the two companies by inserting the ratio calculations from 1 through 5 in a table with the following column headings: Ratio Name, Fast, Style, and Company with More Favorable Ratio. Indicate in the last column which company had the more favorable ratio in each case. 7. how could the analysis be improved if information about these companies' prior years were available?

Income Statement Fast Net Sales Style $12,560,000 $25,210,000 Cost of goods sold $6,142,000 $14,834,000 Selling expenses 4,822,600 7,108,200 Administrative expenses 986,000 2,434,000 Total costs and expenses $11,950,600 $24,376,200 $609,400 $833,800 194,000 228,000 $415,400 605,800 200,000 300,000 $215,400 $305,800 $4.31 $10.19 Costs and expenses Income from operations Interest expense Income before income taxes Income taxes expense Net income Earnings per share Balance Sheets Fast Style Assets Cash $80,000 $192,400 Marketable securities (at cost) 203,400 84,600 Accounts receibable (net) 552,800 985,400 Inventory 629,800 1,253,400 54,400 114,000 2,913,600 6,552,000 553,200 144,800 $4,987,200 $9,326,600 $344,000 $572,600 150,000 400,000 50,200 73,400 Bonds payable 2,000,000 2,000,000 Common stock, $20 par value 1,000,000 600,000 Additional paid-in capital 609,800 3,568,600 Retained earnings 833,200 2,112,600 $4,987,200 $9,326,600 Prepaid expenses Property, plant, and equipment (net) Intangibles and oher assets Total assets Liabilities and Stockholders' Equity Accounts payable Notes payable Income taxes payable Total liabilities and stockholders' equity