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 LX Electronics or Rose ­Corporation and have assembled the following data. Selected income statement data for the current year follows:

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

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

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
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

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LX Rose $456,250 $511,000 Cost of goods sold...$210,000 $255,000 18,500 50,000 64,400 Net sales (all on credit)... Interest expense Net income. LX Rose 42,000 40,700 $ 83,000 82,500 Current receivables, net Inventories Total assets. Common stock $26,000 $271,000 10,000 $1 par (10,000 shares). $1 par (14,000 shares) 14,000 LX Rose Current assets: Cash Short-term investments Current receivables, net Inventories Prepaid expenses Total current assets... Total assets 29,200 20,500 22,200 44,000 105,000 42,000 67,000 $178,200 $196,000 $300,000 $272,000 $105,000 $102,000 $105,000 $136,000 Total liabilities Common stock $1 par (10,000 shares)10,000 $1 par (14,000 shares) Total stockholders equity Market price per share of common stock 14,000 $195,000 $136,000 $ 80.00 85.10 ………