Please describe the circumstances of the following case study and recommend which company to purchase. Explain your approach to the problem, perform relevant calculations and analyses, and justify your recommendation. Ensure your work and conclusions are thoroughly supported.

Case Study:

You work in the mergers and acquisitions department of a large conglomerate who is looking to invest in a retail business. Two companies, Fashion Forward and Dream Designs, are the final two options being considered. You have the most recent availableincome statements and two years of balance sheetsfor each company.

Compute the following ratios for each company:

• Profit Margin Ratio
• Return on Assets
• Current Ratio
• Quick Ratio
• AR Turnover Ratio
• Average Collection Period
• Inventory Turnover Ratio
• Average Sales Period
• Debt to Equity Ratio
• For this assignment:Compute all required amounts and explain how the computations were performed
• Evaluate the results for each company and explain what each ratio means
• Compare and contrast the companies.
• Based on your analysis:
• recommend which company the organization should pursue
• Thoroughly support your conclusion, including what other factors should be considered

Make sure to include

• Perform all calculations correctly.
• Articulate how the calculations were performed.
• Evaluate the ratios computed and explain the meaning of the ratios.
• Compare the companies.
• Recommend which company to pursue, supported by well-thought-out rationale and considering any other factors that could impact the recommendation.

Income Statements Fashion Forward Dream Designs 12/31/2018 12/31/2018

Revenue Credit Sales 2,000,000 4,320,000 Non-Credit Sales 500,000 1,080,000 Total Revenue 2,500,000 5,400,000 Cost of Sales 1,400,000 3,250,000 Gross Profit 1,100,000 2,150,000 Operating Expenses Research and Development 50,000 200,000 Selling, General, and Administrative 750,000 1,600,000 Total Operating Expenses 800,000 1,800,000 Earnings Before Interest and Taxes 300,000 350,000 Interest Expense (18,000) (50,000) Income Before Tax 282,000 300,000 Income Tax Expense (145,500) (87,500) Net Income 136,500 212,500 - -

Balance Sheets Fashion Forward Fashion Forward Dream Designs Dream

Designs 12/31/2018 12/31/2017 12/31/2018 12/31/2017 Current Assets Cash and Cash Equivalents 950,000 980,000 1,710,000 1,705,000 Accounts Receivable 200,000 150,000 250,000 275,000 Inventory 112,000 105,000 200,000 215,000 Other Current Assets 35,000 50,000 120,500 100,000 Total Current Assets 1,297,000 1,285,000 2,280,500 2,295,000 Property, Plant and Equipment 635,000 700,000 850,000 900,000 Goodwill 750,000 750,000 1,150,000 1,150,000 Other Long-Term Assets 65,000 70,000 100,750 105,000 Total Assets 2,747,000 2,805,000 4,381,250 4,450,000 Current Liabilities Accounts Payable 545,000 535,000 845,750 875,000 Short-Term Debt 25,000 - 50,000 60,000 Other Current Liabilities 600,000 510,000 730,000 740,000 Total Current Liabilities 1,170,000 1,045,000 1,625,750 1,675,000 Long-Term Debt 75,000 - 120,500 130,000 Other Long-Term Liabilities 100,000 75,000 155,000 165,000 Total Liabilities 1,345,000 1,120,000 1,901,250 1,970,000 Stockholders Equity Common Stock 500,000 775,000 749,500 942,750 Preferred Stock 150,000 294,500 390,000 409,250 Retained Earnings 752,000 615,500 1,340,500 1,128,000 Total Stockholders Equity 1,402,000 1,685,000 2,480,000 2,480,000 Total Liabilities and Stockholders Equity 2,747,000 2,805,000 4,381,250 4,450,000 - - - - - -