Financial Accounting: E14-14 Selected data from the financial statements of Italian Marble Co

Financial Accounting

E14-14
Selected data from the financial statements of Italian Marble Co. and Brazil Stone Products for the year just ended follow. Assume that for both companies dividends declared were equal in amount to net earnings during the year and therefore stockholders' equity did not change. The two companies are in the same line of business.
Italian Marble Co. Brazil Stone Products
Total liabilities 200,000 100,000
Total assets 800,000 400,000
Sales (all on credit) 1,800,000 1,200,000
Average inventory 240,000 140,000
Average receivables 200,000 100,000
Gross profit as a percentage of sales 40% 30%
Operating expenses as a percentage of sales 36% 25%
Net income as a percentage of sales 3% 5%

Compute the following for each company and state a brief conclusion about which company is in the stronger financial position. (Round answers to two decimal places, if result is not a whole number. Omit the "$" & "%" signs in your response.)
a. Net income
b. Net income as a percentage of stockholders' equity
c. Accounts receivable turnover
d. Inventory turnover
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