Assume that you are purchasing an investment and have decided to invest in a company in the smartphone business. You have narrowed the choice to Digital Plus Electronics or Speed Network Electronics and have assembled the following data.
Selected income statement data for the current year follow:

Selected balance sheet data at the beginning of the current year follow:

Selected balance sheet and market-price data at the end of the current year follow:

Your strategy is to invest in companies that have low price/earnings ratios but appear to be in good shape financially. Assume that you have analyzed all other factors and that your decision depends on the results of ratio analysis.
Requirement
Compute the following ratios for both companies for the current year and decide which company's stock better fits your investment strategy. Assume all sales are on credit.
a. Acid-test ratio
b. Inventory turnover
c. Days' sales in average receivables
d. Debt ratio
e. Gross profit percentage
f. Earnings per share of common stock
g. Price/earnings ratio

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Speed Network $554,800 $231,000 Digital Plus Net sales (all on credit). Cost of goods sold.. Interest expense.. $401,500 $209,000 $ 16,500 $ 49,000 Net income. $ 63,000 Speed Network $ 53,480 Digital Plus Current receivables, net. Inventories... $ 34,300 $ 77,000 $ 86,000 $258,000 Total assets $276,000 Common stock: $1 par (10,000 shares). $1 par (14,000 shares). $ 10,000 $ 14,000