The 2015 financial statements for the Ernst and young 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, Young Is more conservative, and as its president has said, We avoid what we consider to be undue risk Neither company is publicly held. Ernst Company has an annual audit by a CPA but Young Company does not
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 analysis (and any other available information) and give your recommended choice with the supporting explanation.

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Ernst CompanyYoung Company Balance Sheet Cash Accounts receivable (net) Inventory Operational assets (net) Other assets Total assets Current liabilities Long-term debt (10%) Capital stock (par S10) Contributed capital in excess of par Retained earnings Total liabilities and stockholder equity Income Statement Sales revenue (1/3 on credit) Cost of goods sold Expenses (including interest and income tax) Net income $41,000 38,000 99,000 140,000 84,000 S402,000 $99,000 65,000 148,000 29,000 61,000 $402,000 $21,000 31,000 40,000 401,000 305,000 $798,000 $49,000 60,000 512,000 106,000 71,000 $798,000 $447,000 (241,000) 161,000) S 45,000 $802,000 (400,000) (311,000) $91,000 Income Statement Sales revenue (1/3 on credit) Cost of goods sold Expenses (including interest and income tax) Net income Selected data from the 2014 statements Accounts receivable (net) Inventory Long-term debt Other data Per share price at end of 2015 (offering price Average income tax rate Dividends declared and paid in 2015 $447,000 (241,000) 161,000) S 45,000 $802,000 (400,000) (311,000) $91,000 $18,000 94,000 60,000 38,000 44,000 48,000 22 30% S 33,000 S 15 30% $148,000