Chapter 12, Problem 12.13S

(Learning Objective 4: Analyze a company based on its ratios) Take the role of an investment analyst. It is your job to recommend investments for your client. The only information you have is the following ratio values for two companies in the data analytics industry:

Ratio	Abbott Co.	Stellar Corporation
Days’ sales in receivables......................	48	41
Inventory turnover...............................	11	7
Gross profit percentage........................	58%	67%
Net income as a percent of sales...........	13%	12%
Times interest earned...........................	13	19
Return on equity..................................	30%	35%
Return on assets...................................	19%	14%

Recommend one company’s stock over the other. State the reasons for your recommendation.