which target would you recommend and why?

Background You are the Director of Accounting & Controls for Company XYZ and your boss the VP/Controller has asked you to review a pending transaction that has two potential targets. Your company is trying to decide which target is a better fit both financially and culturally Below, you will find the facts of the case and the question that needs to be addressed Facts Section I - Financials & Metrics as of 12/31/XX In $000's Target A Target B Sales cos 698,000 209.000 15,000 194,000 535,500 485,700$ 49,800 SG&A 30,000 $ EBIT 19,800 Weight Average Cost of Capital Net Present Value- Discounted Cash Flow Payback Period Collection Days Inventory Tunover Working Capital Turnover Cash Accounts Receivable, net Debt 1096 225,000 10 years 45 days 12 8.5 1096 434,000 8 years 30 days 50,000 $ 100,000 $ 150,000 120,000 100,000 50,000 10,000 S 100,000 Section II - Due Diligence Findings Financial Control Environment Pending Legal Issues (likelihood >50%) Environmental Issues HR Involvement & Responsiveness Operational Environment Business Practices & Ethics Excellent Properly Accrued Properly Accrued Poor Poor Poor Under Accrued Lack of Documentation Average Excellent Average Question for Discussion Which target would you recommend and why