Assume that you are considering purchasing stock as an investment. You have narrowed the choice to either Topline Corporation stock or Browse 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.

Requirement 1. Compute the following ratios for both companies for the current year, and decide which company's stock better fits your investment strategy.

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: Browse Topline 604,000 $ 526,000 Net sales (all on credit). Cost of goods sold. Income from operations 458,000 382,000 95,000 78,000 Interest expense 16,000 32,000 Net income... 64,000 Topline Browse Balance sheet: Current receivables, net 143,000 $ 195,000 Inventories. 203,000 196,000 Total assets. 844,000 908,000 Long-term debt. 311,000 35,000 100,000 Preferred stock, 7%, $175 par Common stock, $1 par (100,000 shares).. $5 par (15,000 shares) Total stockholders' equity. 75,000 260,000 217,000 Topline Browse Current assets: Cash 23,000 $ 34,000 Short-term investments 10,000 17,000 Current receivables, net 168,000 Inventories 182,000 218,000 11,000 186,000 6,000 Prepaid expenses Total current assets 444,000 411,000 Total assets. 976,000 929,000 Total current liabilities 362,000 334,000 Total liabilities 668,000 690,000 Preferred stock, 7%, $175 par 35,000 100,000 Common stock, $1 par (100,000 shares) $5 par (15,000 shares) Total stockholders' equity 75,000 308,000 239,000 Market price per share of common stock $ 7.68 $ 39.40 e. Times-interest-earned ratio Select the formula and then enter the amounts to calculate the times-interest-earned ratio for Browse. (Round the ratio to one decimal place, X.X.) Times-interest-earned ratio Browse f. Return on common stockholders' equity Select the formula and then enter the amounts to calculate the return on common stockholders' equity (ROE) for each company. (Complete all answer boxes. to the nearest one-tenth percent, X.X%.) ) ROE ( ( Topline = % Browse % g. Earnings per share of common stock Select the formula and then enter the amounts to calculate earnings per share (EPS) for each company. (Complete all answer boxes. If an account has a zero balance, enter a "0". Round EPS to two decimal places, X.XX.) ) 7 EPS Topline )/ Browse h. Price-earnings ratio Select the formula and then enter the amounts to calculate the price-earnings (P/E) ratio for each company. (Enter amounts in the formula to two decimal places, X.XX, but then round the P/E ratios to one decimal place, X.X, as needed.) - P/E ratio II Topline Browse Il Which company's stock better fits your investment strategy? The common stock of seems to fit the investment strategy better. Its price-earnings ratio is and 3