Assume that you are purchasing shares in a company in the variety store and gas bar supply business. Suppose you have narrowed the choice to BFI Trading Ltd. and Lin Corp. and have assembled the following data: Selected income statement data for the year ended December 31, 2017:

Selected balance sheet and market price data for the year ended December 31, 2017:

Selected balance sheet data at January 1, 2017:

Your investment strategy is to purchase the shares of companies that have low price- earnings ratios but appear to be in good shape financially. Assume you have analyzed all other factors, and your decision depends on the results of the ratio analysis to be performed.
Required
Compute the following ratios for both companies for the current year and decide which company's shares better fit your investment strategy:
a. Current ratio
b. Acid-test ratio
c. Inventory turnover
d. Days' sales in receivables
e. Debt ratio
f. Times-interest-earned ratio
g. Return on net sales
h. Return on total assets
i. Return on common shareholders' equity
j. Earnings per common share
k. Book value per common share
l. Price-earnings ratio

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BFI Trading Ltd. Net sales (all on credit) Cost of goods sold Income from operations Interest expense Net income $1,060,000 602,000 186,000 40,000 82,000 Lin Corp. $1,246,000 722,000 202,000 10,000 124,000 BFI Trading Ltd. Lin Corp Current assets: Cash Short-term investments Current receivables, net Inventories Prepaid expenses $134,000 0 312,000 424,000 24,000 894,000 2,070,000 748,000 1,444,000 60,000 $110,000 24,000 392,000 448,000 28,000 1,002,000 2,344,000 800,000 1,508,000 Total current assets Total assets Total current liabilitie Total liabilities Preferred shares, $10.00 (300 shares) Common shares (75,000 shares) Common shares (10,000 shares) Total shareholders' equity Market price per common share 450,000 100,000 626,000 $84.00 836,000 $55.00 BFI Trading Ltd. $ 330,000 448,000 Lin Corp. $ 280,000 Current receivables, net Inventories Total assets Preferred shareholders' equity, $10.00 (300 shares) Common shares (75,000 shares) Common shares (10,000 shares) Total shareholders' equity 1,970,000470,000 1,720,000 60,000 450,000 100,000 560,000 720,000