Question
Explain which company you would prefer to invest in and why. Company 1 Current Ratio = 0.75 Acid Test Ratio = 50.775 A /R Collection
Explain which company you would prefer to invest in and why.
Company 1
Current Ratio = 0.75
Acid Test Ratio = 50.775
A/R Collection Period = 25.98 Days
Average Sale Period = 51.20 Days
Total Asset Turnover = 0.58
Times Interest Earned Ratio = 10.78
Debt-to-Equity Ratio = 1.42
Gross Margin Percentage = 48.63%
Net Profit Margin Percentage = 5.76%
Return on Total Assets =8.60%
Return on Equity = 8.26%
Company 2
Current Ratio = 0.59
Acid Test Ratio = 30.05%
A/R Collection Period = 36.40 Days
Average Sale Period = 52.60 Days
Total Asset Turnover = 0.56
Times Interest Earned Ratio = 4.82
Gross Margin Percentage = 3.09
Net Profit Margin Percentage = 34.13%
Debt-to-Equity Ratio = 10.39%
Return on Total Assets = 30.56%
Return on Equity = 24.85%
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