Selected ratios for two companies operating in the beverage industry follow.

Instructions
(a) Both companies offer their customers credit terms of net 30 days. Indicate the ratio(s) that should be used to assess how well the accounts receivable are managed. Which company appears to be managing its accounts receivable better?
(b) Indicate the ratio(s) that should be used to assess inventory management. Which company appears to be managing its inventory better?
(c) Refresh's current ratio is higher than Flavour's. Identify two possible reasons for this.
(d) Which company is more solvent? Identify the ratio(s) that should be used to determine this and defend your choice.
(e) You notice that Refresh's gross profit margin is significantly more than Flavour's but its profit margin is lower.
Identify two possible reasons for this.
(f) Which company do investors appear to believe has greater prospects for future profitability? Indicate the ratio(s) you used to reach this conclusion and explain your reasoning.
Taking It Further
Which company is using leverage more effectively? Explain.

Refresh Ltd. Flavour Corp. Current ratio Debt to total assets Gross profit margin Operating cycle Price-earnings ratio Profit margin Receivables turnover Return on assets Return on equity 8