The 2004 financial statements tor Armstrong and Blair companies are summarized here:

The companies are in the same line of business and are direct competitors in a large metropolitan area.
Both have been in business approximately 10 years, and each has had steady growth. The management of each has a different viewpoint in many respects. Blair 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 a CPA but Blair Company does not.
Required: 1. Complete a schedule that reflects a ratio analysis of each company. Compute the ratios discussed in the chapter. 2. A client of yours has the opportunity to buy 1 percent of the shares in one or the other company at the per share prices given and has decided to invest in one of the companies. Based on the data given, prepare a comparative written evaluation of the ratio analyses (and any other available information)

and give your recommended choice with the supporting explanation.

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Armstrong Company Blair Company Balance Sheet Cash Accounts receivable (net) Inventory Operational assets (net) Other assets Total assets Current liabilities $ 35,000 40,000 $ 22,000 30,000 100,000 40,000 140,000 400,000 85,000 308,000 $400,000 $800,000 $100,000 $ 50,000 Long-term debt (10%) 60,000 70,000 Capital stock (par $10) 150,000 500,000 Contributed capital in excess of par 30,000 110,000 Retained earnings 60,000 70,000 Total liabilities and stockholders' equity $400,000 $800,000 Income Statement Sales revenue (1/3 on credit) Cost of goods sold Expenses (including interest and income tax) Net income Selected data from the 2003 statements $450,000 $810,000 (245,000) (405,000) (160,000) (315,000) $ 45,000 $ 90,000 Accounts receivable (net) Inventory Long-term debt $ 20,000 92,000 60,000 $ 38,000 45,000 70,000 Other data Per share price at end of 2004 (offering price) $ 18 S 15 Average income tax rate Dividends declared and paid in 2004 30% 30% $ 36,000 $150,000