Selected financial data for Changretta Inc. and Solomon Ltd. (in $ thousands) are presented below.

Instructions

a. For each company, calculate the following ratios:

1. Current ratio

2. Receivables turnover

3. Inventory turnover

4. Operating cycle

5. Debt to total assets

6. Interest coverage

7. Gross profit margin

8. Profit margin

9. Asset turnover

10. Return on assets

11. Return on equity

b. Compare the liquidity, solvency, and profitability of the two companies.

Taking It Further

How would other comprehensive loss factor into your analysis above?

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Changretta Inc. Solomon Ltd. Statement of Income (Loss) Total revenue $36,755 $36,333 Cost of sales 18,930 26,136 Gross profit Operating expenses 17,825 10,197 17,110 8,076 Profit from operations Interest expense (revenue) Other expenses Other non-operating income 715 2,121 (36) 535 153 351 436 Profit before income tax 949 2,022 Income tax expense 325 627 Profit $ 624 $ 1,395 Balance Sheet Current assets $ 9,680 38,487 $10,838 Non-current assets 34,096 Total assets $48,167 $44,934 $ 4,958 4,766 Current liabilities $ 6,335 Non-current liabilities 4,217 Total liabilities 9,724 10,552 Shareholders' equity 38,443 34,382 Total liabilities and shareholders' equity $48,167 $44,934 Additional information: $ 6,179 Average accounts receivable Average inventories Average total assets Average total shareholders' equity $ 1,413 3,398 3,676 45,412 45,651 34,200 33,447