John Easterwood recently inherited a large sum of money and is considering the purchase of one of two family-owned companies for sale in his hometown of Eastaboga, Alabama. The two firms are the Ancel Grocery Store and Starks Furniture Store. The balance sheets and income statements for these firms are given below.

Ancel Grocery

Starks Furniture

Income statement

Net sales

1,200,000

200,000

Cost of goods sold

960,000

100,000

Gross profit

240,000

100,000

Operating expenses

210,000

32,000

Net Operating Income

30,000

68,000

Interest expenses

6,000

20,000

Profit before tax

24,000

48,000

Taxes

12,000

24,000

Net income

12,000

24,000

Balance sheet

Cash

30,000

15,000

Marketable securities

10,000

5,000

Accounts receivables

30,000

40,000

Inventory

20,000

60,000

Current assets

90,000

120,000

Net fixed assets

110,000

120,000

Total assets

200,000

240,000

Accounts payable

15,000

20,000

Notes payable

15,000

40,000

Current liabilities

30,000

60,000

Long term debt

25,000

30,000

Common stock

85,000

70,000

Retained earnings

60,000

80,000

Total liabilities & equity

200,000

240,000

Required Calculate Profitability, and Long run solvency ratios which firm is best