Doug, Bev, Emily, and Daniel have sold their shares of ABC Ltd. to Software Solutions Inc., a public company. One of the terms of the sale agreement was that Emily and Daniel remain employees of Software Solutions for the next two years and continue to operate the business. Emily and Daniel are now operating ABC as a wholly owned subsidiary of Software Solutions. Daniel and Emily have received a sizable amount of cash from the sale of their shares of ABC. As a result, they are considering where they should invest this money. They recognize how profitable ABC continues to be as a subsidiary of Software Solutions and are considering investing some of their excess cash in Software Solutions. They have accumulated a number of ratios for Software Solutions Inc. and Micro Inc. (a publicly traded competitor of Software Solutions), in addition to the overall industry, to enable them to make a decision on whether or not they should invest in Software Solutions.

Ratio		Software Solutions Inc.			Micro Inc.			Industry Ratio
Current ratio		1.9	:1		1.1	:1		1.5	:1
Receivables turnover		5.2	times		6.3	times		6.1	times
Inventory turnover		13.3	times		17.9	times		18.0	times
Debt to total assets		35.8	%		31.5	%		35.0	%
Times interest earned		10.8	times		11.7	times		12.4	times
Gross profit margin		43.0	%		24.0	%		24.9	%
Profit margin		20.9	%		14.3	%		13.2	%
Return on assets		11.3	%		9.6	%		8.9	%
Return on common shareholders equity		21.9	%		17.9	%		16.5	%
Dividend yield		1.7	%		1.3	%		1.5	%
Price-earnings ratio		12.5	times		14.8	times		9.5	times

Which company is more liquid?

Choose your answer here Software Solutions Inc.Micro Inc.

Which company is more solvent?

Choose your answer here Software Solutions Inc.Micro Inc.

Which company is more profitable?

Choose your answer here Software Solutions Inc.Micro Inc.

If an investor was more interested in receiving dividend income than in appreciation of the share price, which companys shares would they prefer to buy?

Choose your answer here Software Solutions Inc.Micro Inc.

If an investor was more interested in appreciation of the share price than receiving dividend income, which companys shares would they prefer to buy?

Choose your answer here Software Solutions Inc.Micro Inc.