Chapter 17 Analysis of Financial Statements 755 Fargo Company Company Ball Fargo CompanyCompany Ball Data from the current year-end balance sheets Data from the current year's income statement Sales Assets Cash Accounts recelvable, net Current notes receivable (trade) Merchandise inventory Prepaid expenses Plant assets, net Total assets $393,600 $667,500 290,600 480,000 12,300 12,300 33,850 61,700 2.19 s 20,000 36,500 Cost of goods sold.. 5,900 77.100 11.600 86,800 9,700 70,500 Interest expense 9,000 Income tax expense 82,000 Net income 0,100 Basic earnings per share 5,700 1.27 176,900 252,300 $382,100 $460,400 Beginning-of-year balance sheet data Accounts receivable, net Liabilities and Equity Current riabilities Long-term notes payable Common stock, $5 par value Retained earnings Total liabilities and equity $72,200 73,300 S 90,500 97,000 Current notes receivable (trade) 105,100 383,400 133,000 49,100 80,500 443,000 141,000 109,700 93,000 93,300 Merchandise inventory 133,000 141,000 Total assets 65,600 129,100 Common stock, $5 par value S382,100 $460,400 Retained earnings Required 1. For both companies compute the (a) current ratio, (b) acid-test ratio, (c) accounts (including notes) Check Fa Acc receivable turnover, (d) inventory turnover, (e) days' sales in inventory, and (f) days sales uncol- lected. Identify the company you consider to be the better short-term credit risk and explain why. inventory turnover, 30 Round to one decimal place 4 9 2. For both companies compute the (a) profit margin ratio, (b) total asset turnover, (c) return on total as- Bal: Profit margin 92%P-14 sels, and (d) return on comnon stockholders' equity.Assuming al echcoman pad rash dindends of $1.50 per share and each company's stock can be purchased at $25 per share, compute their (e) price- earnings ratios and (f) dividend yields. Round to one decimal place; for part b, round to two decimals. Identify which company's stock you would recommend as the better investment and explain why