liquidity ratios.

	Bayside Company	Gamba Company
1. current asset ratio	205200/90500=2.27	208100/97000=2.15
2. quick ratio	118400/90500=1.31	126100/97000=1.3

solvency ratios

	Bayside Company	Gamba Company
1. interest coverage ratio EBIT / interest expense	57,550 / 5,900=9.75	101,200 / 12,300=8.23
2. debt to total assets ratio total debt / total assets	183500/382100=0.48	190300/460400=0.41
3. debt to equity ratios total debt/ total equity	183500/198600=0.92	190300/270100=0.7

efficiency ratios

	Bayside Company	Gamba Company
average total assets	(382100+383400) / 2 =382750	(460400+443000)/2 =451700
1. asset turnover ratio= sales/ average total assets	393600/382750=1.03	667500/451700=1.48
average inventory	(105100+86800)/2= 95950	(82000+80500)/2= 81250
2. inventory turnover ratio = cost of goods sold/ average inventory	290600/95950=3.03	480000/81250=5.91

profitability ratios

	Bayside Company	Gamba Company
1. gross profit margin (gross profit *100) / sales	(103000 *100) / 393600=26.17%	(187500 *100) / 667500=28.09%
2 net profit margin (net profit *100) / sales	(33850 *100) / 393600 =8.6%	(61700 *100) / 667500 =9.24%
3. return on assets =(net profit *100) /average total assets	(33850 *100) / 382750 =8.84%	(61700 *100) / 451700 =13.66%
4. return on equity =(net profit *100) /shareholders equity	(33850 *100) / 198600= 17.04%	(61700 *100) / 270100 =22.84%

market perspective. ratios

	Bayside Company	Gamba Company
1. Current market price (per share)	25	30
2. earnings per share	1.27	2.19
3. Dividend paid (per share)	1.5	1.8
4.price earnings ratio= MPS/EPS	25/1.27=19.69	30/2.19=13.7
5.dividend yield ratio= (DPS*100)/MPS	(1.5*100)/25=6%	(1.8*100)/30 =6%

answer :- on the basis of above ratios, both companies are sound in terms liquidity, solvency, efficiency, profitability, and market perspective.

EVALUATION OF SHARES OF BOTH COMPANIES FOR RECOMMENDING INVESTMENT.

While making the investment in company , following ratios of company should be observed to make investment.

.price earnings ratio, current ratio, asset turnover ratio, current ratios interest coverage ratio.

price earnings ratio of Gamba company is low as compared to Bayside Company.

interest coverage ratio of Bayside Company is high as compared to Gamba company.

asset turnover ratio of Gamba Company is high as compared to Bayside Company.

Also , the profitability ratios ,i.e , gross profit margin,net profit margin, return on assets ,return on equity of of Gamba Company is high as compared to Bayside Company.

hence , Gamba company is better performing.

It is recommended to invest in Gamba company.

MY QUESTION IS:

Efficiency

Accounts (and notes) receivable turnover

Days sales in receivables (average collection period)

Inventory turnover

Days sales in inventory

Total asset turnover