Assume you are purchasing an investment and decide to invest in a company in the home remodeling business. You narrow the choice to Build it Right, Inc., or Structurally Sound Corp. You assemble the following selected data:

Selected income statement data for the current year follow:

	Welcome Home, Inc.	Brick Town, Corp.
Net Sales	$298,000	$223,000
Cost of Goods Sold	155,000	125,000
Income from operations	83,000	47,000
Interest Expense	13,000	-----
Net Income	43,000	29,000

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

	Welcome Home, Inc.	Brick Town, Corp.
Current Assets:
Cash	$12,000	$13,000
Short-Term Investments	11,000	12,000
Accounts Receivable, Net	28,000	25,000
Inventory	60,000	52,000
Prepaid Expenses	2,000	1,000
Total Current Assets	113,000	103,000
Total Assets	197,000	159,000
Total Current Liabilities	59,000	65,000
Total Liabilities	79,000	65,000
Preffered Stock, 5%, $100 par	20,000
Common stock, $1.00 par, 6,000 shares $2.50 par, 3,000 shares	7,500	6,000
Total Stockholders Equity	118,000	94,000
Market price per share of common stock	$67	$31

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

	Build it Right, Inc.	Structurally Sound Corp.
Accounts Receivable, Net	$29,000	$24,000
Inventory	53,000	56,000
Total Assets	162,000	155,000
Preffered stock, 5%, $100 par	20,000
Common stock, $1.00 par, 6,000 shares $2.50 par, 3,000 shares	7,500	6,000
Total Stockholders Equity	76,000	71,000

Your investment strategy is to purchase the stock of the company that has a low price/earnings ratio but appears to be in good shape financially. Assume that you analyzed all other factors and your decision depends on the results of the ratio analysis to be performed.

Requirements

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 Ratio

b. Inventory turnover

c. Days' sales in average receivables

d. Debt ratio

e. Earnings per share of common stokc

f. Price/earnings ratio

2. Compute the EVA for each company, assuming a 10% cost of capital. Does the EVA confirm the opinion you formed as a result of the ratio analysis?