Datatech	Sigma					datatech	sigma
			company	company					company	company
data from current year end balance sheet						Data from the current years income statement
assets						sales			660,000	780,200
cash			18,500	33,000		cost of goods sold			485,100	532,500
accounts receivable, net			36,400	56,400		interest expense			6,900	11,000
notes receivable (trade)			8,100	6,200		income tax expense			12,800	19,300
merchandise inventory			83,440	131,500		net income			67,770	105,000
prepaid expenses			4,000	5,950		basic earnings per share			$1.94	$2.56
plant and equipment, net			284,000	303,400
total assets			434,440	536,450
			Datatech	sigma					datatech	sigma
			company	company					company	company
liabilities and stockholders equity						beginning of year data
current liabilities			60,340	92,300		accounts receivable, net			28,800	53,200
long term notes payable			79,800	100,000		notes receivabe (trade)			0	0
common stock, $5 par value			175,000	205,000		merchandise inventory			54,600	106,400
retained earnings			119,300	139,150		total assets			388,000	372,500
						common stock, $5 par value			175,000	205,000
						retained earnings			94,300	90,600
total liabiities and equity			434,440	536,450

a. Compute the current ratio, acid-test ratio, accounts (including notes) receivable turnover, inventory turnover, days sales in inventory, and days sales in receivables for both companies. Identify the company that you consider to be the better short-term credit risk and explain why.

b. Compute the net profit margin, total asset turnover, return on total assets, and return on common stockholders equity for both companies. Assuming that each company paid cash dividends of $1.50 per share and each companys stock can be purchased at $25 per share, compute their price-earnings ratios and dividend yields. Identify which companys stock you would recommend as the better investment and explain why.

c. Summarize the ratio analysis of the two companies. Summarize the credit analysis and decision. Summarize the asset and equity performance of both companies. Summarize the stock performance and your investment advice.