The 2010 financial statements for Armstrong and Hamilton 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. Hamilton is more conservative, and as its president said, €œWe avoid what we consider to be undue risk.€ Neither company is publicly held. Armstrong Company has an annual audit by a CPA but Hamilton 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 10 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 supportingexplanation.

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Armstrong Company Hamilton Company Balance Sheet Accounts receivable (net) Inventory Operational assets (net) Other assets $ 41,000 38,000 99,000 140,000 84.000 402,000 $ 21,000 31,000 40,000 401.000 305.00 798,000 Total assets Current liabilities Long-term debt ( 10%) Capital stock (par $10) Contributed capital in excess of par Retained earnings 99,000 65,000 148,000 29.000 61,000 S 49,000 60,000 512,000 106,000 71,000 798,000 Total liabilities and stockholders' equity Income Statement Sales revenue (13 on credit) Cost of goods sold Expenses (including interest and income tax) Net income 402,000 447,000 (241,000) (161,000) 45,000 (398,000) (311,000) 93,000 Selected data from the 2009 statements Accounts receivable (net) Inventory Long-term debt Other data Per share price at end of 2010 (offering price Average income tax rate Dividends declared and paid in 2010 18,000 94,000 60,000 38,000 44,000 48,000 33,000 148,000