Below is the summary information from the financial statements of two companies competing in the same industry:

Assuming each company paid cash dividends of $1.50 per share and each companys shares is currently traded at $25 per share in the stock market.

Question:

Based on the ratio analysis in the table above, evaluate and discuss the financial health of both companies in respect of their liquidity, solvency, efficiency, profitability and market perspective (The answer must be in the form of a written answer, no further calculation required)

Fargo Ball Company Company Fargo Company Ball Company Data from the current year-end statements of financial position Assets Cash ... $ 20,000 $ 36,500 Accounts receivable, net 77,100 70,500 Current notes receivable (trade). 11,600 9,000 Merchandise inventory. 86,800 82,000 Prepaid expenses ... 9,700 10,100 Property, plant and equipment, net 176,900 252,300 Total assets.. $382,100 $460,400 Data from the current year's income statement Sales .... $393,600 Cost of goods sold. 290,600 Interest expense.. 5,900 Income tax expense. 5,700 Net profit..... 33,850 Basic earnings per share. 1.27 $667,500 480,000 12,300 12,300 61,700 2.19 Liabilities and Equity Current liabilities .... Long-term notes payable. Share capital .... Retained earnings Total liabilities and equity.. $ 90,500 93,000 133,000 65,600 $382,100 $ 97,000 93,300 141,000 129,100 $460,400 Beginning-of-year statement of financial position data Accounts receivable, net .. $ 72,200 Current notes receivable (trade).. 0 Merchandise inventory.. 105,100 Total assets. 383,400 Share capital.. 133,000 Retained earnings. 49,100 $ 73,300 0 80,500 443,000 141,000 109,700 Data from the current year-end Assets Cash Account receivable, net Current notes receivable (trade) Merchandise inventory Prepaid expenses Property, plant and equipment, net Total Assets Fargo Ball Company company $ $ 20,000 36,500 77,100 70,500 11,600 9,000 86,800 82,000 9,700 10,100 176,900 252,300 382,100 460,400 Data from the current year's income statement Fargo Ball Company company $ $ Sales 393,600 667,500 Cost of goods sold 290,600 480,000 Interest expenses 5,900 12,300 Income tax expense 5,700 12,300 Net profit 33,850 61,700 Basic earnings per share 1.27 2.19 Liabilities and Equity Current Liabilities Long-term notes payable Shares Capital Retained Earning Total liabilities and equity 90,500 93,000 133,000 65,600 382,100 97,000 93,300 141,000 129,100 460,400 Beginning of year statement of financial position data $ $ Accounts receivable, net 72,200 73,300 Current notes receivable (trade) 0 0 Merchandise Inventory 105,100 80,500 Total assets 383,400 443,000 Share Capital 133,000 141,000 Retained Earnings 49,100 109,700 Current Assets Total liabilities EBIT or Gross Profit Average inventory Average total assets Average Account Recivable 205,200 183,500 103,000 95950 382750 208,100 190,300 187,500 81250 451700 76400 80450 Formula Fargo Company Ball Company Financial Ratio Liquidty Working Capital Current Ratio Quick/acid-test ratio Current assets - Current Liabilities current asset / current liability (current asset - inventory)/current liability 114,700.00 2.27 1.31 111,100.00 2.15 1.30 Solvency Debt ratio Debt to equity ratio time interest earned Total Liabilities/Total Assets ITotal debt / equity EBIT/ Interest Expenses 0.48 0.70 17.46 0.41 0.66 15.24 4.89 Efficiency Account Receivable Turnover Inventory Turnover Days' sales in inventory Total Asset turnover 3.03 Net credit Sales / Average Account Receivable COGS/ Average Inventories (Average inventory / COGS) * 365 Net sales / Average total assets 8.74 5.91 61.78 days 1.48 120.52 1.03 Profitability Gross profit margin net profit margin retun on total assets return on equity Gross profit/ Net sales Net profitet Sales Net profit/total assets Net profit/total equity 26.17% 8.60% 8.84% 25.45% 28.09% 9.24% 13.66% 43.76% Market perspective Price-earned ratio Dividend yield Share Price/ Earning Per share Annual dividends per share / Price per share 19.69 6% 11.42 6%