Assume the role of a banker and you have funds to lend to only one company. You have narrowed your choices to a company in the air conditioning & heating business - either Reitzel Heating or Klassen. You are given the following financial data for both companies on the following page.

For each company calculate the following

• Current Ratio
• Acid test ratio
• Inventory turnover
• Days' sales in average receivable
• Debt ratio
• Times interest earned ratio
• Return on shareholders' equity
• Earnings per share of common stock
• Price Earnings Ratio
• Debt to Equity Ratio

Required:

1. Prepare Executive summary explaining which company you would loan the funds to. Justify your answer using the ratios that you calculated.

2. Would you consider becoming an equity holder for either company? Why or why not?