The company wants to invest some of its excess cash in trading securities and is considering two investments, Paddle Company (PC) and Recreational Life Vests (RLV). The income statement, balance sheet, and other data for both companies follow for 2024 and 2023 as well as selected data for 2022:

Required

1. Using the financial statements given, compute the following ratios for both companies for 2024 and 2023. Assume all sales are credit sales. Round all ratios to two decimal places.

a. Current ratio

b. Inventory turnover

c. Accounts receivable turnover

d. Gross margin percentage

e. Debt ratio

f. Return on assets

g. Return on common shareholders’ equity

h. Earnings per share

i. Price-earnings ratio

j. Dividend yield

2. Compare the companies’ performance for 2024 and 2023. Make a recommendation to Canyon Canoe Company about investing in these companies. Which company would be a better investment, Paddle Company or Recreational Life Vests? Base your answer on ability to pay current liabilities, ability to sell merchandise and collect receivables, ability to pay long-term debt, profitability, and attractiveness as an investment.

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PADDLE COMPANY RECREATIONAL LIFE VESTS Comparative Financial Statements For the Years Ended December 31 Comparative Financial Statements For the Years Ended December 31 Income Statement 2024 2023 2022 2024 2023 2022 Net sales revenue $ 430,489 $ 425,410 $ 410,570 $ 383,870 Cost of goods sold 258,756 256,797 299,110 280,190 Gross margin 171,733 168,613 111,460 103,680 Operating expenses 153,880 151,922 78,290 70,830 Operating income 17,853 16,691 33,170 32,850 Interest expense 865 788 2,780 2,980 Income before income tax 16,988 15,903 30,390 29,870 Income tax expense 5,137 4,809 8,780 8,630 Net income $ 11,851 $ 11,094 $ 21,610 $ 215,240 Balance Sheet Assets Cash and cash equivalents $ 69,159 $ 70,793 $ 65,730 $ 55,270 Accounts receivable 44,798 44,452 $44,104 39,810 38,650 $ 36,460 Inventory 79,919 66,341 76,363 68,500 65,230 59,930 Other current assets 15,494 16,264 24,450 37,630 Total current assets 209,370 197,850 198,490 196,780 Long-term assets 89,834 90,776 116,760 116,270 Total assets $ 299,204 $ 288,626 $276,482 $ 315,250 $ 313,050 $310,640 Liabilities Current liabilities $ 69,554 $ 60,232 $ 90,810 $ 90,010 Long-term liabilities 31,682 29,936 96,310 105,890 Total liabilities 101,236 90,168 187,120 195,900 Shareholders' Equity Common shares 72,795 80,885 111,530 102,480 Retained earnings 125.173 117,573 16,600 14,670 Total shareholders' equity 197,968 198,458 197,668 128,130 117,150 103,840 Total liabilities and shareholder's equity $299,204 $ 288,626 $ 315,250 $ 313,050 Other Data Market price per share $ 21.38 $ 33.82 46.37 51.64 Annual dividend per share 0.32 0.30 0.53 0.45 Weighted average number of shares outstanding 9,000 8,000 9,000 8,000