Company A Company B: Net sales $675,000 $560,000 Cost of goods sold 504,000 480,000 Cash 45,900 18,000 Accounts receivable (net) 67,500 63,000 Inventory 75,600 144,000

Current liabilities 84,000 80,000

Assume that the year-end balances shown for accounts receivable and for inventory also represent the average balances of these items throughout the year. Each company offers 30-day credit terms to its customers.

REQUIRED: 1. For each of the two companies, compute the following: (5 marks) a) current ratio b) quick ratio c) merchandise turnover d) accounts receivable turnover e) days' sales uncollected

2. With reference to answer to requirement, identify to which company you would prefer to sell $30,000 of merchandise on 30-day credit terms. Why?

I dont understand how to do the second part. I got all the numbers for the first section. Please explain number 2. Thank you!