• What does the debt ratio tell you about each company?
• What conclusions do you come to about the return on equity for each company?
• Taking into account the full ratio analysis which company is a better investment and why?

AutoSave te ed VIEW v Lanna Taylci File Hume Insert Page Laynut Formulas Data Review View Help I U Comments l l 13 Share (D PROTECTED VIEW Be carefulifiles from the Internet can contain viruses. Unless you need to edit it's safer [0 stay In Protected View. Enable Editing X A] 7 i 1'} AAA Inc. andZZZ lni:. operate in the same manufaeturingtype industry. The finaneial statements and notes are below. A A A B i c i D i E r G H i I J K L L 1 AAA Inc. and 212 Inc. operate in the same manufacturing tylae industry. The financial statements and notes are below. L Year one is the current year and year two is the previous year. 3 4 AAA Inc. ZZZ Inc. 5 income Statement [in one) Year 1 Year 2 income Statement [in one] Year 1 Year 2 6 Sales Revenue 5 590,000 5 500,000 Sales Revenue 5 507,000 5 437,000 7 Cost of Goods Sold 300,000 295,000 Product Cost of Goods Sold 150,000 162,000 8 Total Gross Margin 290,000 305,000 Total Gross Margin 357,000 325,000 9 Selling and Marketing Expense 33,000 31,000 Selling and Marketing Expense 44,000 44,000 10 Adm' ' trative Expense 123,000 115,600 Admi ' trative Expense 70,000 6,300 11 Depreciation Expense 24,000 28,000 Depreciation Expense 9,000 9,000 12 Earnings from Operations 60,000 30,400 Eamings from Operations 234,000 265,200 13 interest Expense 7,000 7,000 interest Expense 42,000 20,000 14 Income Taxes 15,000 18,000 Income Taxes 47,000 46,000 15 Net Earnings 38,000 55,400 Net Earnings 145,000 199,200 15 E.P.5. 1.92 3.30 E.P.5. 2.08 4.02 17 18 19 Balance sheet (in mi Year 1 Year 2 Balance sheet (in out) Year 1 Year 2 20 Cash and Cash Equivalents 17,000 12,000 Cash and Cash Equivalents 55,000 33,000 21 Accounts Receivable 53,000 42,000 Accounts Receivable 23,000 31,000 22 inventory 87,000 72,000 Inventory 17,000 10,000 23 Total Current Assets 167,000 126,000 Total Current Assets 95,000 74,000 Property, Plant and Equipment net of $50,000 arid $43,000 Property. Plant arid Equipment net of 514000 arid 6000 24 accumulated depreciation 140,000 112,000 accumulated depreciation 236,000 64,000 25 intangibles 50,000 50,000 intangibles 17,000 0 25 Total Assets 357,000 288,000 Total Assets 398,000 138,000 27 Accounts Payable 35,000 40,000 Accounts Payable 28,000 12,000 23 Accrued Liab' 'ti es 25,000 16,000 Accrued Liabilities 6,000 3,000 29 Total Current Liabilities 50,000 56,000 Total Current Liabilities 34,000 20,000 30 Bonds Payable 90,000 54,000 Bonds Payable 130,000 20,000 31 Total liabilities 150,000 120,000 Total liab 164,000 40,000 i a main . v I3 2 ratios l Tab 3 Income Statement l . 4 t