Following are data from the statements of two companies selling similar products:

Current Year-End Balance Sheets
____________________________Comp #1_________Comp#2
Cash $ 11,900_________$ 20,000
Notes receivable 7,700___________3,200
Accounts receivable, net 42,000__________64,000
Inventory 58,800__________87,680
Prepaid expenses 1,680___________3,520
Plant and equipment, net 232,120_________274,400
Total assets $354,200_________$452,800

Current liabilities $ 56,000_________$ 80,000
Mortgage payable 70,000 _________80,000
Common stock, $10 par value 140,000_________160,000
Retained earnings 88,200 _________132,800
Total liab. & stockhold equity $354,200 _________$452,800

Beginning-of-Year Data
Inventory $ 53,200_________$ 85,120
Total assets 345,800_________443,200
Stockholders’ equity 217,000_________285,120

Data from the Current Year’s Income Statement
Sales $672,000_________$880,000
Cost of goods sold 528,080_________699,840
Interest expense 4,200_________5,600
Net income 23,373_________28,896


The Homework Questions:

1. Calculate current ratios, acid-test ratios, inventory turnovers, and days’ sales uncollected for the two companies. Then state which company you think is the better short-term credit risk and why.

2. Calculate return on total assets employed and return on stockholders’ equity. Then, under the assumption that each company’s stock can be purchased at book value, state which company’s stock you think is the better investment and why.


MY QUESTIONS TO PEOPLE READING THIS:

From the above information and the additional info in Question #2 how do I figure out the Preferred Dividends.