Assume that you are purchasing shares in a company in the variety store and gas bar supply business. Suppose you have narrowed the choice to BFI Trading Ltd. and Lin Corp. and have assembled the following data:

Selected income statement data for the year ended December 31, 2014

Selected balance sheet and market price data for the year ended December 31, 2014

Selected balance sheet data at January 1, 2014

Your investment strategy is to purchase the shares of companies that have low price/ earnings ratios but appear to be in good shape financially. Assume you have analyzed all other factors, and your decision depends on the results of the ratio analysis to be performed.
Required
Compute the following ratios for both companies for the current year and decide which company's shares better fit your investment strategy:
a. Current ratio
b. Acid-test ratio
c. Inventory turnover
d. Days' sales in average receivables
e. Debt ratio
f. Times-interest-earned ratio
g. Return on net sales
h. Return on total assets
i. Return on common shareholders' equity
j. Earnings per common share
k. Book value per common share
l. Price/earnings ratio

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BFI Trading Ltd Lin Corp Net sales (all on credit) Cost of goods sold Income from operations Interest expense Net income $1,060,000 602,000 186,000 40,000 82,000 $1246,000 722,000 202,000 10,000 124,000 FI Trading LtdLin Ce Current assets: s 110,000 24,000 392,000 448,000 28,000 S 134,000 Short-term investments 312,000 424,000 24,000 S 894,000 $2,070,000 748,000 1,444,000 60,000 Inventories Prepaid expenses Total current assets Total assets Total current liabilities Total liabilities Preferred shares, $1000 (300 shares) Common shares (75,000 shares) Common shares (10000 shares) Total shareholders' equity Market price per common share $2,344,000 00,000 1508,000 626,000 $ 84.00 836,000 $ 55.00 BFI Trading Ltd. s 330,000 Lin Corp. $ 280,000 470,000 1,720,000 Inventories Total assets Preferred shareholders' equity, $10.00 (300 shares)60,000 Common shares (75,000 shares) Common shares (10,000 shares) Total shareholders' equity 450,000 100,000 560,000 720,000