Assume that you purchasing an investment and have decided to invest in a company in the digital phone business. You have narrowed the choice to Best Digital, Corp. and Very Network, Inc., and have assembled the following data:

Selected income-statement data for the current year

	Best Digital	Very Network
Net sales (all on credit). . . . . . . . . . . . . . . .	$423,035	$497,130
Cost of goods sold. . . . . . . . . . . . . . . . . . . .	207,000	258,000
Interest expense. . . . . . . . . . . . . . . . . . . . .	--	17,000
Net income. . . . . . . . . . . . . . . . . . . . . . . . . .	50,000	76,000

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

	Best Digital	Very Network
Current assets:
Cash. . . . . . . . . . . . . . . . . . . . . .	$28,000	$15,000
Short-term investments. . . . . . . . .	40,000	19,000
Current receivables, net. . . . . . . . . .	38,000	43,000
Inventories. . . . . . . . . . . . . . . . . . . .	64,000	99,000
Prepaid expenses. . . . . . . . . . . . . .	21,000	16,000
Total current assets. . . . . . . . . . . . .	$191,000	$192,000
Total assets. . . . . . . . . . . . . . . . . . . . . . . . .	$266,000	$323,000
Total current liabilities. . . . . . . . . . . . . . . . .	103,000	95,000
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . .	103,000	132,000
Common stock, $1 par (10,000 shares)	10,000
$2 par (15,000 shares)		30,000
Total stockholders' equity. . . . . . . . . . . . . .	163,000	191,000
Market price per share of common stock. .	$75.00	$116.61

Selected balance-sheet data at the beginning of the current year

	Best Digital	Very Network
Balance sheet:
Current receivables, net. . . . . . . . . .	$41,000	$53,000
Inventories. . . . . . . . . . . . . . . . . . . .	80,000	87,000
Total assets. . . . . . . . . . . . . . . . . . .	257,000	271,000
Common stock, $1 par (10,000 shares)	10,000
$2 par (15,000 shares)		30,000

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.
	a.	Acid-test ratio
	b.	Inventory turnover
	c.	Days' sales in average receivables
	d.	Debt ratio
	e.	Earnings per share of common stock
	f.	Price/earnings ratio Round answers to two decimals