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    Financial ratios

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    The following information is available from the annual reports of Lucky Company and Broke Company

    Lucky Broke

    Sales 26,510 34,512
    Gross profit 6610 8887
    Net Income 565 1271
    Current assets 11712 28447
    Beginning total assets 17102 33138
    Ending total assets 22,080 36167
    Current Liabilities 7966 14950
    Total Liabilities 16136 31,222
    Average common shares outstanding 125 240
    Preferred stock dividends paid 0 0


    (a) For each company, compute the following ratios:
    1. Current ratio
    2. Debt to total assets ratio
    3. Earnings per share

    (b) Based on your calculations, discuss the relative liquidity, solvency, and profitability of the two companies.

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    Solution Preview

    Please see attached file.

    (a) For each company, compute the following ratios:

    Lucky Broke
    1. Current ratio
    Current Assets/Current ...

    Solution Summary

    Response helps in computation of financial ratios