1. Compute the current ratio, acid-test ratio, accounts receivable turnover, inventory turnover, days sales in inventory, and days sales in receivables ratios for both companies.
2. Identify by this analysis the company that you consider the better short-term credit risk and explain
3. Compute the net profit margin, total asset turnover, return on total assets, and return on common stockholders equity for both
4. Assume each company paid a cash dividend of $1.50 per share and that each companys stock can be purchased at $25 a Compute each companys price-earnings ratio and dividend yield.
5. Identify which companys stock you would recommend as the better investment and explain

CASE 1-3 Comparative Analysis: Credit and Equity Analysis Two companies competing in the same industry are being evaluated by a bank tha can lend money to only one of them. Summary information from the financia statements of the two companies follows