Problem: 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
Instructions
(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.