Assume that you are purchasing an investment and have decided to invest in a company in the air-conditioning and heating business. You have narrowed the choice to Smajstrla, Inc., and DuBois Corp. You have assembled the following selected data:

Your investment strategy is to purchase the stocks of companies that have low price/earnings ratios but appear to be in good shape financially. Assume that you have analyzed all other factors and your decision depends on the results of the ratio analysis to be performed.
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Compute the following ratios for both companies for the current year, and decide which company's stock better fits your investment strategy.
1. Current ratio 2. Acid-test ratio 3. Inventory turnover 4. Days' sales in average receivables 5. Debt ratio 6. Times-interest-earned ratio 7. Return on net sales 8. Return on total assets 9. Return on common stockholders' equity 10. Earnings per share of common stock 11. Book value per share of common stock 12. Price/earnings ratio

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Selected income statement data for current year: Net sales (all on credit). Cost of goods sold. Income from operations. Interest expense. Net income Smajstrla, DuBois Inc. Corp. $497,000 $371,000 258,000 209,000 138,000 79,000 19,000 72,000 48,000. Selected balance sheet and market price data at end of current year: Smajstrla, Inc. DuBois Corp... Cash.......... Total assets. Current assets: Short-term investments. Current receivables, net....... Inventories..... Prepaid expenses. Total current assets Total current liabilities. Total liabilities Preferred stock: 5%, $100 par. $ 19,000 $ 22,000 18,000 20,000 46,000 42,000 100,000 87,000 3,000 2.000 186,000 173,000 328,000 265,000 98,000 108,000 131,000 108,000 20,000 Common stock, $1 par (10,000 shares).. 10,000 $2.50 par (5,000 shares).. 12,500 Total stockholders' equity 197,000 157,000 Market price per share of common stock..... $112 $51