For each company, determine the Current ratio (2.4:1)

Andrew Peller Limited and Magnotta Winery Corporation are two producers of quality wines in Canada. Selected financial data (in thousands) for these two competitors for a recent year are as follows:

Instructions

1. For each company, determine the following measures, rounding to one decimal place. Industry averages are provided in parentheses after each ratio.

a. Current ratio (2.4:1)

b. Accounts receivable turnover (11.3 times)

c. Inventory turnover (3.2 times)

d. Total asset turnover (0.6 times) e. debt ratio (63%)

f. Times interest earned ratio (3.8 times)

g. Profit margin (2.8%) h. return on assets (1.7%)

i. Return on shareholders’ equity (4.6%)

2. Compare the liquidity, efficiency, solvency, and profitability of the two companies to each other and to the industry.

3. Which company would be more appealing to an investor? Explain your decision.