The financial statements for Armstrong and Blair companies for the current year are summarized below: Armstrong Company Blair Company Statement of Financial Position Cash Accounts receivable (net) Inventory Property, plant, and equipment (net) Other non-current assets Total assets Current liabilities Long-term debt (10%) Share capital Contributed surplus Retained earnings Total liabilities and shareholders' equity Statement of Earnings Sales revenue (1/3 on credit) Cost of sales Expenses (including interest and income tax) Net earnings $ 35,000 40,000 100,000 140,000 85,000 $ 400,000 $ 100,000 60,000 150,000 30,000 60,000 $ 400,000 $ 22,000 30,000 40,000 400,000 308,000 $ 800,000 $ 50,000 70,000 500,000 110,000 70,000 $ 800,000 $ 450,000 (245,000) (160,000) $ 45,000 $ 810,000 (405,000) (315,000) $ 90,000 Selected data from the financial statements for the previous year follows: $20,000 92,000 60,000 $ 40,000 48,000 70,000 Accounts receivable (net) Inventory Long-term debt Other data: Share price year-end Income tax rate Dividends declared and paid Dividends declared and paid $ 18 30% $36,000 15,000 $ 15 30% $150,000 50,000 The companies are in the same line of business and are direct competitors in a large metropolitan area. Both have been in business approximately ten years, and each has had steady growth. The management of each has a different viewpoint in many respects. Blair Company is more conservative, and as its president said, We avoid what we consider to be undue risk. Neither company is publicly held. Armstrong Company has an annual audit by an independent auditor, but Blair Company does not. Required: 1. Complete a schedule that reflects a ratio analysis of each company. Use ending balances if average balances are not available. (Round intermediate calculations and final answers to 2 decimal places.) Armstrong Company Blair Company Ratio Profitability ratios: Return on equity 18.75 % 13.24% Return on assets 11.25 % 11.25% % % % % Financial leverage percentage Gross profit percentage Profit margin Earnings per share Asset turnover ratios: 10.00% 11.11% $ 0.30 per share $ 0.18 per share 1.13 times Fixed asset turnover Receivables turnover 1.01 times 7.71 times 5.00 times 2.55 times 9.20 times Inventory turnover Liquidity ratios: Cash ratio Current ratio times times Quick ratio Liquidity ratios: Times-interest-earned ratio Debt-to-equity ratio Market tests: Pricelearnings ratio Dividend yield ratio 60.00 83.33 % %