LO4 P12-66B. (Learning Objective 4: Use ratios to decide between two stock investments) Assume that you are considering purchasing choice to either Border Corporation stock or Celebration Company stock and have assembled the following data for the two companies. Selected income statement data for the current year: stock as an investment. You have narrowed the Border Celebration Net sales (all on c Cost of goods sold..458,000 Income from operations Interest expense Net income 517,000 388,000 70,000 10,000 2,000 $601,000 94,000 63,000 Selected balance sheet and market price data at the end of the current year: Border Current assets: S 26,000 9,000 185,000 211,000 18,000 449,000 985,000 367,000 671,000 $ 35,000 18,000 167,000 187,000 12,000 419,000 933,000 Cash Current receivables, net. Prepaid Total current assets Total assets Total current liabilities Total liabilities Preferred stock: 9%, $175 par Common stock, $1 par (115,000 shares) 700,000 35,000 115,000 S5 par (20,000 shares) 100,000 Total stockholders' equity Market 314,000 S 5.50 price per share of common stock S 30.24 Selected balance sheet data at the beginning of the current year Border Celebration Balance sheet: Current receivables, Total Long-term debt Preferred stock, 9%, $175 par Common stock, $1 par (115,000 $141,000 205,000 844,000 $198,000 199,000 910,000 310,000 35,000 115,000 S5 par (20,000 100,000 219,000 Total stockholders' equity 263,000 appear to be in Your strategy is to good shape financially. Assume that you have analyzed all other factors and that your decision depends on the results of your ratio analysis. invest in companies that have low price-earnings ratios but Requirements 1. Calculate 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. Earnin h. Price-earnings ratio gs per share of common stock