The financial statements for Royale and Cavalier companies are summarized here: Royale Company Cavalier Company Balance Sheet Cash Accounts Receivable, Net $ 17,000 47,000 $ 80,000 8,000 Inventory Equipment, Net Other Assets Total Assets Current Liabilities 94,000 534,000 132,000 $824,000 9,000 144,000 38,000 $279,000 $104,000 $ 21,000 Note Payable (long-term) 174,000 Common Stock (par $20) 472,000 Additional Paid-In Capital 42,000 Retained Earnings 32,000 39,000 202,000 9,000 8,000 Total Liabilities and Stockholders' Equity $824,000 $279,000 Income Statement Sales Revenue $776,000 Cost of Goods Sold 472,000 Other Expenses 232,000 $256,000 142,000 87,000 Net Income $ 72,000 $ 27,000 Other Data Per share price at end of year $ 18.00 $ 10.00 Selected Data from Previous Year Accounts Receivable, Net $ 39,000 Note Payable (long-term) Equipment, Net Inventory Total Stockholders' Equity 174,000 534,000 87,000 546,000 $ 6,000 39,000 144,000 30,000 219,000 Return to que These two companies are in the same business and state but different cities. Each company has been in operation for about 10 years. Both companies received an unqualified audit opinion on the financial statements. Royale Company wants to borrow $67,000 cash and Cavalier Company is asking for $22,000. The loans will be for a two-year period. Both companies estimate bad debts based on an aging analysis, but Cavalier has estimated slightly higher uncollectible rates than Royale. Neither company issued stock in the current year. Assume the end-of-year total assets and net equipment balances approximate the year's average and all sales are on account. Required: 1. Calculate the following ratios. (Use 365 days in a year. Round your intermediate calculations and final answers to 2 decimal places.) Required: 1. Calculate the following ratios. (Use 365 days in a year. Round your intermediate calculations and final answers to 2 decimal places.) Answer is complete but not entirely correct. Cavalier Company Ratio Royale Company Tests of Profitability: 1. Net Profit Margin 9.28 % 10.55 % 2. Gross Profit Percentage 39.18 % 44.53 % 3. Fixed Asset Tumover 1.45 1.78 4. Return on Equity 13.19 % 12.33 % 5. Earnings per Share $ 3.05 $ 2.67 6. Price/Earnings Ratio 5.90 3.75 Tests of Liquidity: 7. Receivables Turnover 20.23 9.98 X Days to Collect 25.79 26.68 8. Inventory Turnover 69.92 50.14 Days to Sell 84.69 97.59 9. Current Ratio 2.79 6.43 Tests of Solvency 10. Debt-to-Assets 0.21 0.14