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The 2019 financial statements for Company A and Company B are provided below:The companies are in the same line of business and are direct competitors in India. Both have been in business approximately 10 years, and each has had steady growth. The management of each has a different viewpoint in many respects. Hamington is more conservative, and as its president said, We avoid what we consider to be undue risk. Neither company is publicly held. Myra Company has an annual audit by a Chartered Accountant firm but Hamington Company does not.

Required:

1. Compute the ratio analysis of each company and try to include all the ratios you can.

2.A client of yours has the opportunity to buy 10% of the shares in one or the other company at the per share prices given and has decided to invest in one of the companies. Based on the data given, prepare a comparative written evaluation of the ratio analysis and give your recommended choice with the supporting explanation.

Particulars	Company A		Company B
Balance Sheet
Cash		41,000		21,000
Accounts receivable (net)		38,000		31,000
Inventory		99,000		40,000
Operational assets (net)		1,40,000		4,01,000
Other assets		84,000		3,05,000
Total Assets		4,02,000		7,98,000
Current liabilities		99,000		49,000
Long term debt (10%)		65,000		60,000
Capital stock (par Rs. 10)		1,48,000		5,12,000
Contributed capital in excess of part		29,000		1,06,000
Retained earnings		61,000		71,000
Total liabilities and stockholders equity		4,02,000		7,98,000
Income Statement
Sales Revenue (1/3 on credit)		4,47,000		8,02,000
Cost of goods sold		-2,41,000		-3,98,000
Expenses (including interest and income tax)		-1,61,000		-3,11,000
Net Income		45,000		93,000
Selected data for 2018 statements
Accounts receivable (net)		18,000		38,000
Inventory		94,000		44,000
Long-term debt		60,000		48,000
Other data
Per share price at the end of 2019 (offering price)		17		15
Average income tax rate	30%		30%
Dividends declared and paid in 2019		33,000		1,48,000

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