In layman’s terms, how is each company spending their cash with respect to reinvestments inthe business, changes in debt, and returning money to shareholders?

Present a synopsis of your analysis. You may organize the memo as you see fit, but it must follow the principles of good businesscommunication. The requirements for each component are outlined below.Executive Memo:1. Profitability/Net Income Margins What are the after-tax net income margins (i.e., net profit margins) for both companies? How do they compare? Who achieves the higher net income margin? Why?Tip: Analyze the major cost structure line items in the income statement (COGS, SG&A,interest, other, and taxes) as percentages of net sales, so you can identify reasons for betternet income margins. Identify and comment on the differences. You may not know why aparticular cost item like COGS is higher or lower, and that’s okay. Your CEO only wants toknow which cost-structure items are higher or lower for each company.2. Inventory Management Who does a better job managing their inventory (Inventory Days on Hand ratio)? What are their respective 3-year trends for Inventory DOH? What options could the company consider to improve inventory management?3. Cash Is King How much net cash from operations did each company generate last year? Which company has done a better job generating cash from operations? In layman’s terms, how is each company spending their cash with respect to reinvestments inthe business, changes in debt, and returning money to shareholders?4. Liquidity How do the companies compare in terms of the current ratio, and what are their respective 3-year trends? Do their current ratios indicate that either of these companies could go bankrupt soon?Explain.