Assume that you are considering purchasing stock as an investment. You have narrowed the choice to either Superiority Corporation stock or Internet Company stock and have assembled the following data for the two companies. 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.

1. Compute the following ratios for both companies for the current year, and decide which company's stock better fits your investment strategy. a. Quick (acid-test) ratio b. Inventory turnover c. Days' sales in average receivables d. Debt ratio e. Times-interest-earned ratio f. Return on common stockholders' equity g. Earnings per share of common stock h. Price-earnings ratio Selected income statement data for the current year: Internet Superiority 599,000 $ 516,000 Net sales (all on credit). Cost of goods sold. Income from operations 456,000 91,000 382,000 76,000 Interest expense 16,000 Net income. 61,000 40,000 Selected balance sheet and market price data at end of current year: Superiority Internet Current assets: Cash 24,000 $ 37,000 Short-term investments 10,000 17,000 Current receivables, net 189,000 162,000 Inventories 210,000 18,000 185,000 13,000 Prepaid expenses Total current assets 451,000 414,000 Total assets. 935,000 977,000 361,000 Total current liabilities 341,000 Total liabilities 670,000 687,000 Preferred stock, 6%, $100 par 20,000 115,000 Common stock, $1 par (115,000 shares) $5 par (10,000 shares) 50,000 Total stockholders' equity 307,000 248,000 Market price per share of common stock 5.30 $ 81.48 Selected balance sheet data at beginning of current year: Superiority Internet Balance sheet: Current receivables, net 144,000 $ 196,000 Inventories. 206,000 198,000 Total assets. 849,000 912,000 Long-term debt 305,000 20,000 115,000 Preferred stock, 6%, $100 par Common stock, $1 par (115,000 shares) $5 par (10,000 shares) Total stockholders' equity . 50,000 264,000 218,000