Financial Analysis

The following financial results are shown for East, Inc. and West, Inc.

Ratios East, Inc. West, Inc.

Current ratio 2.3 2.6

Acid test ratio 1.2 1.4

Accounts receivable turnover 8.4 times 8.8 times

Inventory turnover 4.7 times 5.1 times

Days sales in inventory 64 days 59 days

Days sales uncollected 34.2 days 29.7 days

Profit margin ratio 3.2% 2.8%

Total asset turnover 1.1 .9

Return on common stockholder' equity 4.6% 4.1%

Price earnings ratio 18.3 28.8

Dividend yield .89% .90

Debt ratio .62 .68

Times interest earned 2.6 times 2.2 times

From the above financial data, prepare two separate memos.In the first memo, determine which of the two companies would be the better short-term credit risk and explain why.In the second memo, determine which of the two companies the better investment is and explain why. Your explanations must mention the exact ratios and numbers compared to support your choice.

Memo #1: The company I selected as the better short-term credit risk is:________________________

Provide explanation in the SUBMISSION BOX in Blackboard

Memo #2: The company I selected as the better investment is:_____________________________