Q.No.2 (b). what is the need to conduct the Solvency Analysis when the liquidity analysis serves the purpose of checking the cash position and liability paying condition of the company? What does PE Ratio tell the investors? Is there any difference between PE ratio, EPS and DPS (Dividend per Share), what insights both ratios provide to the investors? Which category of stakeholders rely on these two ratios? What is the difference between DPS and Dividend Yeild?

Q.No.2 (a) You have a client who has the opportunity to invest $30000/- in one of the two companies from a single industry. The only information he has given you on these companies is shown below. According to your client the word HIGH refers to the top third of the industry; Average is the middle and third; "LOW" is the bottom third. Required: your client would like you to advise him on which company to invest in. Write a brief memo to your client justifying your recommendation. Company 1 Low Company 2 High High Low Particulars Earnings Per Share Return on Total Assets Debt to Equity Ratio Current Ratio Price/Earnings Dividend Yield Ratio High Average Average Low High Average Low High