Presented as follows are 12 financial ratios for two companies in the sane industry. Colgate-Palmolive Co. (Colgate) and Procter & Gamble Co. (P&G). Both of these companies sell health, beauty, and other household consumer goods.

Required

a. Determine which company appears to be the most profitable. Explain the reasons for your decision, and include any needed discussion of the difficulties of comparing ratios from these two companies.

b. Determine which company appears to be using its assets most efficiently. Explain the reasons for your decision, and include any needed discussion of the difficulties of comparing ratios from these two companies.

c. Determine which company appears to have the greater financial risk. Consider both short-term and long-term financial risk. Explain the reasons for your decision, and include any needed discussion of the difficulties of comparing ratios from these two companies.

d. Based on these ratios only, which company do you think is the better investment opportunity? Explain the reasons for your decision.

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Colgate P&G Ratio December 31, 2018 June 30, 2018 Asset turnover 1.3 0.6 Average days to collect receivables Average days to sell inventory 32.9 25.6 72.3 50.5 Current ratio 1.14 .83 Debt to assets .98 .55 Dividend yield as of March 22, 2019 Earnings per share (EPS) Net margin Plant assets to long-term liabilities Price-earnings as of March 22, 2019 Return on equity 2.6% 2.8% $2.76 $3.75 15.4% 14.6% 45 .55 23.2 24.7 1,218% 18.4% Return on investment 19.7% 8.2%