Summary information from the financial statements of two companies competing in the same industry follows.

Required
1. For both companies compute the
(a) Current ratio,
(b) Acid-test ratio,
(c) Accounts (including notes) receivable turnover,
(d) Inventory turnover,
(e) Days’ sales in inventory, and
(f) Days’ sales uncollected. Identify the company you consider to be the better short-term credit risk and explain why.
2. For both companies compute the
(a) Profit margin ratio,
(b) Total asset turnover,
(c) Return on total assets, and
(d) Return on common stockholders’ equity. Assuming that each company paid cash dividends of $3.00 per share and each company’s stock can be purchased at $25 per share, compute their
(e) Price-earnings ratios and
(f) Dividend yields. Identify which company’s stock you would recommend as the better investment and explainwhy.

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Loud Company Company Clear Company Company statement $395,600 $669,500 Data from the current yearend balance sheets Data from the current year's income Assets Cash22,000 38,500 Cost of goods sold292.600 482.000 Accounts receivable, net 79.100 72.500 Interest expense. Current notes receivable (trade) .13.600 000 Income tax expense. 7,900 12400 7,700 14,300 35.850 63,700 inventory 88,800 84,000 Net income Prepaid expenses Plant assets, net Total assets 700 2,100 Basic earnings per share.. 1.33 78,900 254,300 $394,100 $472400 Beginning-of-year balance sheet data Accounts receivable, net 74,200 75.300 Liabilities and Equity Current liabilities Long-term notes payable95.000 95300 Merchandise inventory Common stock, $5 par value 35,000 143,000 Total assets Retained earnings Total liabilities and equity-, -. 92.500 99,000 Current notes receivable (trade) 107.100 82,500 385,400 445,000 7600 135,100 Comon stock, $5 par value135000 143,000 $394.100 $472400 Retained earnings