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2. Below are the financial statements of two companies operating in the same industry:

a) Assess their asset management performance and short-term liquidity position using appropriate financial ratios. b) Both companies pay dividends of $4.25 per share and their stock prices are both at $84. Evaluate these companies from the perspective of an investor using appropriate financial ratios

Data from the current year's balance sheet Carbon Company Yanky Company Assets Cash 22,000.00 38,000.00 Accounts receivable, net 42,000.00 64,500.00 Current notes receivable (trade) 10,000.00 3,000.00 Merchandise inventory 95,000.00 149,000.00 Prepaid expenses 5,500.00 8,000.00 Plant assets, net 325,500.00 342,000.00 Total assets 500,000.00 609,500.00 Liabilities and Equity Current liabilities 69,000.00 Long-term notes payable 90,500.00 Common stock, $5 par value 202,000.00 Retained earnings 138,500.00 Total liabilities and equity 500,000.00 Data from the current year's income statement 105,000.00 113,500.00 231,500.00 159,500.00 609,500.00 Sales Cost of goods sold Interest expense Income tax expense Net income Basic earnings per share 864,500.00 657,000.00 9,000.00 16,500.00 182,000.00 4.50 988,500.00 710,500.00 14,500.00 27,500.00 236,000.00 5.10 61,000.00 Beginning-of-year balance sheet data Accounts receivable, net 33,500.00 Current notes receivable (trade) Merchandise inventory 62,500.00 Total assets 447,000.00 Common stock, $5 par value 202,000.00 Retained earnings 110,500.00 120,500.00 429,500.00 231,500.00 105,000.00 Data from the current year's balance sheet Carbon Company Yanky Company Assets Cash 22,000.00 38,000.00 Accounts receivable, net 42,000.00 64,500.00 Current notes receivable (trade) 10,000.00 3,000.00 Merchandise inventory 95,000.00 149,000.00 Prepaid expenses 5,500.00 8,000.00 Plant assets, net 325,500.00 342,000.00 Total assets 500,000.00 609,500.00 Liabilities and Equity Current liabilities 69,000.00 Long-term notes payable 90,500.00 Common stock, $5 par value 202,000.00 Retained earnings 138,500.00 Total liabilities and equity 500,000.00 Data from the current year's income statement 105,000.00 113,500.00 231,500.00 159,500.00 609,500.00 Sales Cost of goods sold Interest expense Income tax expense Net income Basic earnings per share 864,500.00 657,000.00 9,000.00 16,500.00 182,000.00 4.50 988,500.00 710,500.00 14,500.00 27,500.00 236,000.00 5.10 61,000.00 Beginning-of-year balance sheet data Accounts receivable, net 33,500.00 Current notes receivable (trade) Merchandise inventory 62,500.00 Total assets 447,000.00 Common stock, $5 par value 202,000.00 Retained earnings 110,500.00 120,500.00 429,500.00 231,500.00 105,000.00

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