Choosing between 2 companies
Hi can anyone please help me with the following question?
We have the following information for Company X and Company Y for the years-ended 28 February 2007 and 2008.
Company X Company Y
2008 2007 2008 2007
Return on Shareholders Equity 31% 35% 25% 20%
Net Profit before tax (R m) R 5.5 R 6.6 R 5.2 R 4.6
Current Ratio 3.1:1 3.2:1 2.2:1 1.68:1
Acid-test Ratio 0.75:1 1.5:1 1.5:1 0.78:1
Debtors Receivable Period 45 days 60 days 30 days 40 days
Creditors Payment Period 30 days 30 days 40 days 45 days
Stock Turnover Rate 4 times 6 times 9 times 6 times
Gearing Ratio 60 % 40 % 20% 25%
Prepare a report to be presented after an analysis and interpretation of the above information and which company would you recommend, giving reasons for your choice.
Thank you,
Miss Rose
