Ernst Company Young Company Balance sheet Cash Accounts receivable (net) Inventory Operational assets (net) Other assets $22,000 32,200 41,400 402,200 306,800 $42,200 38,500 99,100 141,500 85,100 Total assets $406,400 $804,600 Current liabilities Long-term debt (8%) Capital stock (par $10) Contributed capital in excess of par Retained earnings $ 97,700 63,600 148,800 29,100 67,200 $48,800 59,700 510,800 105,000 80,300 Total liabilities and stockholders' equity $406,400 804,600 Income statement Sales revenue (1/3 on credit) Cost of goods sold Expenses (including interest and income tax) $ 447,200 (242,900) (16,200) $802,600 (399,300) (312,100) Net income $188,100 $ 91,200 Selected data from the 2014 statements Accounts receivable (net) Inventory Long-term debt Other data Per share price at end of 2015 (offering price) Average income tax rate Dividends declared and paid in 2015 $ 18,900 95,700 60,200 $38,100 45,400 49,700 $22 $20 40% 40% $34,700 $149,200 The companies are in the same line of business and are direct competitors in a large metropolitan area.Both have been in business approximately 10 years, and each has had steady growth. The management of each has a different viewpoint in many respects. Young is more conservative, and as its president has said, "We avoid what we consider to be undue risk." Neither company is publicly held. Ernst Company has an annual audit by a CPA but Young Company does not. Required: 1. Complete a schedule that reflects a ratio analysis of each company. (Round your answers to 2 decimal places. Enter percentage answers rounded to 2 decimal places (i.e. 0.1234 should be entered as 12.34).) ERNST COMPANY COMPANY YOUNG Ratio Tests of profitability: Return on equity Return on assets Financial leverage percentage 2 4 arnings per share Profit margin Fixed asset turnover 5 Tests of liquidity: Cash ratio Current ratio Quick ratio Receivable turnover Inventory turnover 10 Solvency and equity position 12. Debt/equity ratio Market tests 13 Price/earnings ratio Dividend yield ratio