Selected ratios for 2018 for two companies in the same industry are presented below:

Ratio	Potter	Draco	Industry Average
Asset turnover	2.7x	2.3x	2.5x
Average collection period	31 days	35 days	38 days
Basic Earnings per share	$2.75	$1.25	Not available
Current Ratio	1:9:1	3:0:1	1:8:1
Dividend yield	0.3%	0.1%	0.2%
Debt to total assets	48%	32%	45%
Gross profit margin	30%	34%	33%
Inventory turnover	10x	7x	8x
Payout ratio	9%	19%	14%
Price-earnings ratio	29x	45x	38x
Profit margin	8%	6%	5%
Return on assets	12%	10%	10%
Return on common shareholders' equity	24%	16%	18%
Time interest earned	5.2x	7.6x	7.2x

REQUIRED: Answer each of the following questions providing the ratio(s) to support your answer, explain.

1) Comment on how successful each company appears to managing its accounts receivable. Terms are net 30 for both companies 2) How well does each company appear to be managing its inventory? 3) Which company is more solvent, explain using ratios? 4) Which company is more profitable, explain using ratios? 5) The gross profit margin for Draco is higher than Potter's and the industry average. Provide two reasons why this would be the case? 6) Which company would investors believe would have greater prospects for seeking growth? 7) Why is Basic Earnings per Share not comparable between companies?