The companies are in the same line of business and are

Reference no: EM13577889

The companies are in the same line of business and are direct competitors in a large metropolitan area. Both have been in business approximately 10 years, and each has had steady growth. One-third of both companies' sales are on credit. Despite these similarities, the management of each has a different viewpoint in many respects. Blair is more conservative, and as its president said, "We avoid what we consider to be undue risk." Both companies use straight-line depreciation, but Blair estimates slightly shorter useful lives than Armstrong. No shares were issued in 2010, and neither company is publicly held. Blair Company has an annual audit by a CPA but Armstrong Company does not.

Requirement 1:

Calculate the ratios. TIP: To calculate EPS, use the balance in Common Stock to determine the number of shares outstanding. Common Stock equals the par value per share times the number of shares. (Round your answers to 2 decimal places. Omit the "$" & "%" signs in your response. Consider 365 days in a year.)

Ratio		Armstrong Company		Blair Company
Tests of profitability:
1.	Net profit margin		%		%
2.	Gross profit percentage		%		%
3.	Fixed asset turnover
4.	Return on equity		%		%
5.	Earnings per share	$		$
6.	Price/earnings ratio
Tests of liquidity:
7.	Receivables turnover
	Days to collect
8.	Inventory turnover
	Days to sell
9.	Current ratio
10.	Quick ratio
Tests of solvency:
11.	Debt-to-assets

Reference no: EM13577889

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