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 Best Digital Electronics or Zone Network Electronics and have assembled the following data.

Selected income statement data for the current year follows:

Income Statement

Best Digital Zone Network

Net sales $($all on credit$)$ $$467,200$ $$569,400$

Cost of goods sold $$203,000$ $$242,000$

Interest expense $$0$ $$19,500$

Net income $$72,800$ $$95,400$

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

Balance Sheet

Best Digital Zone Network

Current receivables, net $$45,060$ $$53,780$

Inventories $$73,000$ $$73,000$

Total assets $$262,000$ $$274,000$

Common stock

$$1$ par $(13,000$ shares$)$ $$13,000$

$$1$ par $(18,000$ shares$)$ $$18,000$

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

Best Digital Zone Network

Current assets

Cash $ $27,000$ $ $18,000$

Short$-$term investments $ $38,520$ $ $15,400$

Current receivables, net $$37,500$ $ $44,500$

Inventories $ $72,000$ $ $103,000$

Prepaid expenses $ $4,980$ $ $6,100$

Total current assets $$180,000$ $ $187,000$

Total assets $$300,000$ $ $325,000$

Total current liabilities $$102,000$ $$95,000$

Total liabilities $$102,000$ $ $143,000$

Common stock

$$1$ par $(13,000$ shares$)$ $ $13,000$

$$1$ par $(18,000$ shares$)$ $ $18,000$

Total stockholders' equity $$198,000$ $ $182,000$

Market price per share of common stock $ $98\mathrm{.}00$ $ $100\mathrm{.}70$

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.

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