Below are current year financial statements for two companies in the same industries and direct comp

Below are current year financial statements for two companies in the same industries and direct competitors. Both companies have been in operation approximately the same length of time. Company A Company BBalance Sheet Cash 31,000 16,000Accounts receivable (net) 29,000 24,000Inventory 87,000 29,000Property and equipment, net 125,000 394,000Other assets 79,000 298,000Total assets 351,000 761,000Current liabilities 91,000 47,000Long-term debt (5% interest) 62,000 58,000Capital stock ($5 par) 145,000 505,000Contributed capital in excess of par 18,000 103,000Retained earnings 35,000 48,000Total liabilities and stockholders’ equity 351,000 761,000Income Statement Sales revenue (1/3 of sales on credit) 452,000 799,000Cost of goods sold (250,000) (396,000)Expenses (including interest and taxes) (161,000) (308,000)Net income 41,000 95,000Selected data from prior year Accounts receivable (net) 16,000 33,000Inventory 81,000 42,000Property and equipment, net 110,000 375,000Long-term debt 65,000 70,000Other data Market price per share at end of current year $16 $13Average income tax rate 25% 25%Dividends declared and paid in current year 22,000 88,000Required:1) Prepare a schedule reflecting a ratio analysis of each company. Compute all ratios from the module for which you have enough data. 2) If an investor were considering an investment in one of these companies, which would you recommend based on this data? Explain your response.

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