You have obtained the financial statements of Day Manufacturing and Night Production, two companies in the manufacturing industry. You have acquired the following information for an analysis of the companies (amounts in thousands):

Required

a. Calculate the following ratios for the two companies for the two years. For 2019, assume the current year amount is equal to the average where required.

i. Current ratio

ii. Accounts receivable turnover

iii. Inventory turnover

iv. Debt to equity

v. Interest coverage

vi. Gross margin

vii. Profit margin

viii. Return on assets

ix. Return on equity

b. Write a brief analysis of the two companies based on the information given and the ratios calculated. Be sure to discuss issues of short-term liquidity, activity, solvency, and profitability. Which company appears to be the better investment for the shareholder? Explain. Which company appears to be the better credit risk for the lender? Explain. Is there any other information you would like to have to complete your analysis?

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Day Manufacturing Night Production 2020 2019 2020 2019 $ 24 $ 21 $ 37 $ 35 Cash Accounts receivable 273 196 280 230 140 120 Inventory 182 154 Prepaid expenses 6. 5 322 400 Capital assets (net) 480 224 Current liabilities 154 175 170 140 Long-term debt 280 308 288 236 140 120 120 Share capital-common shares 140 Retained earnings 392 140 220 120 1,820 1,750 Sales (all credit sales) 2,660 1,680 Cost of goods sold 1,260 1,750 1,260 1,274 Interest expense 28 31 29 24 Taxes (30%) 108 78 90 78 Net income 252 182 210 182