Compare the liquidity, solvency, and profitability of the two companies.

Selected financial data for Changretta Inc and Solomon Ltd. (in $thousands) are presented below. Changretta Inc. Solomon Ltd. $36,755 $36,333 Statement of Comprehensive Income (Loss) Total revenue Cost of sales Gross profit 18,930 26,136 17,825 10,197 Operating expenses 17.110 8,076 Profit from operations 715 2,121 (36) 535 153 Interest expense (revenue) Other expenses Other non-operating income Profit before income tax Income tax expense 351 436 949 2,022 325 627 Profit $624 $1.395 Changretta Inc. Solomon Ltd. Balance Sheet Current assets Non-current assets $9.680 $10,838 38,487 34,096 Total assets $48,167 $44,934 Current liabilities $4.958 $6,335 Non-current liabilities 4.766 4,217 Total liabilities 9.724 10,552 Shareholders equity 38.443 34.382 Changretta Inc. Solomon Ltd. Balance Sheet Current assets $9,680 $10,838 Non-current assets 38,487 34,096 Total assets $48,167 $44,934 Current liabilities $4,958 $6,335 Non-current liabilities 4,766 4,217 Total liabilities 9,724 10,552 Shareholders' equity 38,443 34,382 Total liabilities and shareholders' equity $48,167 $44,934 Additional information: Average accounts receivable $1,413 $6,179 Average inventories 3,398 3,676 Average total assets 45,412 45,651 Average total shareholders' equity 34,200 33,447 Compare the liquidity, solvency, and profitability of the two companies. Changretta Inc. Solomon Ltd. Liquidity Ratios 1. Current ratio 2.0 1.7 2. 26.0 times 5.9 times Receivables turnover Inventory turnover 3. 3. 5.6 times 7.1 times 4. Operating cycle 79.2 days 113.3 days Solvency Ratios 5. Debt to total assets 20.2 % 23.5 % 6. Interest coverage 0 times 4.8 times Profitability Ratios 7. Gross profit margin 48,5 % 28.1 % 8 Profit margin 1.7 % 3.8 % 8. . 9. Asset turnover 0.8 times 0.8 times 10. Return on assets 1.4 % 3.1 % 11. Return on equity 1.8 % 4.2 % B 1 IC T T TX 5 E 3 . Selected financial data for Changretta Inc and Solomon Ltd. (in $thousands) are presented below. Changretta Inc. Solomon Ltd. $36,755 $36,333 Statement of Comprehensive Income (Loss) Total revenue Cost of sales Gross profit 18,930 26,136 17,825 10,197 Operating expenses 17.110 8,076 Profit from operations 715 2,121 (36) 535 153 Interest expense (revenue) Other expenses Other non-operating income Profit before income tax Income tax expense 351 436 949 2,022 325 627 Profit $624 $1.395 Changretta Inc. Solomon Ltd. Balance Sheet Current assets Non-current assets $9.680 $10,838 38,487 34,096 Total assets $48,167 $44,934 Current liabilities $4.958 $6,335 Non-current liabilities 4.766 4,217 Total liabilities 9.724 10,552 Shareholders equity 38.443 34.382 Changretta Inc. Solomon Ltd. Balance Sheet Current assets $9,680 $10,838 Non-current assets 38,487 34,096 Total assets $48,167 $44,934 Current liabilities $4,958 $6,335 Non-current liabilities 4,766 4,217 Total liabilities 9,724 10,552 Shareholders' equity 38,443 34,382 Total liabilities and shareholders' equity $48,167 $44,934 Additional information: Average accounts receivable $1,413 $6,179 Average inventories 3,398 3,676 Average total assets 45,412 45,651 Average total shareholders' equity 34,200 33,447 Compare the liquidity, solvency, and profitability of the two companies. Changretta Inc. Solomon Ltd. Liquidity Ratios 1. Current ratio 2.0 1.7 2. 26.0 times 5.9 times Receivables turnover Inventory turnover 3. 3. 5.6 times 7.1 times 4. Operating cycle 79.2 days 113.3 days Solvency Ratios 5. Debt to total assets 20.2 % 23.5 % 6. Interest coverage 0 times 4.8 times Profitability Ratios 7. Gross profit margin 48,5 % 28.1 % 8 Profit margin 1.7 % 3.8 % 8. . 9. Asset turnover 0.8 times 0.8 times 10. Return on assets 1.4 % 3.1 % 11. Return on equity 1.8 % 4.2 % B 1 IC T T TX 5 E 3