deciding on which bank stock to select: 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 company's stock can be purchased at $25 a Compute each company's price-earnings ratio and dividend yield. 5. Identify which company's stock you would recommend as the better investment and explain inancial statements of the two companies follows: Datatech Sigma Datatech Sigma Company Company Company Company Data from the current year-end balance sheet: Data from the current year's 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 ... ---- Page 62 Datatech Sigma Company Company Datatech Sigma Company Company Beginning-of-year data: Liabilities and Stockholders' Equity Accounts receivable, net Current liabilities $ 60,340 $ 92,300 Notes receivable (trade) Long-term notes payable 79,800 100,000 Merchandise inventory Common stock, $5 par value 175.000 205,000 Total assets Retained earnings 119.300 139,150 Common stock, $5 par value Total liabilities and equity $434,440 $536,450 Retained earnings $ 28,800 $ 53,200 0 0 54,600 106,400 388,000 372,500 175.000 205,000 94,300 90.600