1a. Here are the financial statements for two companies;

All data is in $ and correct units except where specified(*).

Company 1 Company 2

XYZ Income Statement ABC Income Statement

Sales Revenue 344, 000 768,900

Cost of Goods Sold 100,000 199,000

Expenses 203,000 400,000

Net Income 41,000 169,000

Dividends(total) 13,000 28,000

*# Shares Outstanding 28,000 97,000

XYZ Balance Sheet ABC Balance Sheet

Assets

Accounts Receivable 88,000 368,000

Inventory 48,000 121,000

Total Current Assets 438,000 1,213,900

Long Term Assets 1,345,000 3,780,000

Total Assets 1,783,000 4,993,900

Liabilities

Current Liabilities 12,400 47,000

Long Term Debt 795,000 2,550,000

Total Debt 807,400 2,597,000

Owners Equity 975,600 2,396,900

Compute the following ratios for each company(10 points)

Profit Margin

Company 1: 0.1191 Company 2: 0.2197

ROA (Return On Assets)

Company 1: 0.0936 Company 2: 0.13922

ROE (return on equity)

Company 1: 0.042025 Company 2: 0.07050

Receivables T/O (receivables turnover)

Company 1: 3.90909 Company 2: 2.08940

Inventory T/O

Company 1: 2.0833 Company 2: 1.6446

Total Asset T/O

Company 1: 0.19293 Company 2: 0.15396

Current ratio

Company 1: 35.3225 Company 2: 25.82766

Quick ratio

Company 1: 31.451613 Company 2: 23.253191

Debt/Total assets

Company 1: 0.452832 Company 2: 0.520034

EPS (per share)

Company 1: 1.46428 Company 2: 1.742268

1. Analyze and compare the financial performance of the two companies.