Data table Selected income statement data for the current year: Browse Authority 597,000 $ $ 516,000 Net sales (all on credit) Cost of goods sold Income from operations 458,000 88,000 Interest expense 389,000 78,000 10,000 32,000 Net income 67,000 Data table Selected balance sheet data at beginning of current year: Authority Browse Balance sheet: Current receivables, net Inventories $ 147,000 $ 203,000 841,000 Total assets Long-term debt Preferred stock, 7%, $100 par Common stock, $1 par (100,000 shares) $5 par (15,000 shares) Total stockholders' equity 196,000 198,000 906,000 307,000 20,000 100,000 258,000 75,000 224,000 Data table Selected balance sheet and market price data at end of current year: Authority Browse Current assets: Cash $ $ 31,000 $ 10,000 Short-term investments Current receivables, net Inventories 184,000 209,000 13,000 39,000 16,000 166,000 190,000 10,000 Prepaid expenses Total current assets 447,000 Total assets 984,000 Total current liabilities 365,000 671,000 421,000 926,000 339,000 686,000 20,000 100,000 Total liabilities Preferred stock, 7%, $100 par Common stock, $1 par (100,000 shares) $5 par (15,000 shares) Total stockholders' equity Market price per share of common stock 313,000 9.38 $ 75,000 240,000 36.72 $ 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 (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 Next question Assume that you are considering purchasing stock as an investment. You have narrowed the choice to either Authority Corporation stock or Browse Company stock and have assembled the following data for the two companies Click the icon to view the income statement data) Click the icon to view data at end of current year) Click the icon to view data at beginning of current year) Your strategy is to invest in companies that have low price-samnings ratlos 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 Read the requirements Requirement 1. Compute the ratios for both companies for the current your and decide which company's stock better fits your investment strategy Begin by computing the ratios, starting with the quick (acid-test) ratio. Abbreviations used Avg average, Cash cash and cash equivalents, Mkt market, os outstanding, SE stockholders equity, and ST short-term) a. Quick (acid-test) ratio Select the formula and then enter the amounts to calculate the quick (acid-est) ration, (Round the ratios to two decimal places, XXX) Quick ratio Authority Browse ) - ) b. Inventory tumover Select the formula and then enter the amounts to calculate the inventory turnover for each company. (Round the nation to two decimal places, XXX) Inventory turnover Authority Browse c. Days' sales in average receivables Select the formula and then enter the amounts to calculate days' sales in average receivables for each company (Use a 305-day year. Round intermediary calculations to the nearest whole number, X. Round your final answers to one decimal place, XX) Days' sales in average receivables Authority Browse d. Debt ratio Select the formula and then enter the amounts to calculate the debt ratio for each company (Enter the debt ratio in decimal form to two decimal places, XXX) Debt ratio Assume that you are considering purchasing stock as an investment. You have narrowed the cholce to other Authority Corporation stock or Browse Company stock and have assembled the following data for the two companies Click the icon to view the income statement data.) mick the icon to view data at end of current year) Click the icon to view data at beginning of current year.) Your strategy is to invest in companies that have low price-camnings ratlos 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 Read the requirements d. Debt ratio Select the formula and then enter the amounts to calculate the debt ratio for each company (Enter the debt ratio in decimal form to two decimal places XXX Debt ratio Authority Browse e. Times interest-eamed ratio Select the formula and then enter the amounts to calculate the times-interest-eared ratio for Browse (Round the ratio to one decimal place XX) 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 boresIf an account has a zero balance, enter a "0" Enter the ROE as a percentage rounded to the nearest one-tenth percent, XX%. ) ROE Authority % Browse ) g. Eamings 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, XXX) ) EPS Authority Browse ). h. Price-earings ratio Select the formula and then enter the amounts to calculate the price-samnings (P/E) ratio for each company (Enter amounts in the formula to two decimal places, XXX, but then round Assume that you are considering purchasing stock as an investment. You have marrowed the choice to other Authorty Corporation stock or Browse Company stock and have assembled the following data for the two companies Click the icon to view the income statement data) Click the icon to view data at end of current year) (Click the icon to view data at beginning of current year) Your strategy is to invest in companies that have low price tamings 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 Read the requirements Times-interest-earned ratio Browse 1. Retum 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. If an account has a zero balance, enter a "0" Enter the ROE as a percentage rounded to the nearest one-tenth percent. XX%) ROE Authony 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, XXX) ) EPS Authority Browse h. Price-earnings ratio Select the formula and then enter the amounts to calculate the price-namings (PVE) ratio for each company (Entor amounts in the formula to two decimal places, XXX, but then round the P/E ratios to one decimal place. XX, as needed) PIE ratio Authority Browse Which company's stock better fits your investment strategy? The common stock of seems to fit the investment strategy better its price-caminge ratio is Y and