Assume you are purchasing an investment and decide to invest in a company in the home remodelling business. You narrow the choice to Bob€™s Home Repair, Inc. or Stellar Stability, Corp. You assemble the following selected data.

Selected income statement data for the current year follow:

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

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

Your investment strategy is to purchase the shares 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.
Requirement
1. Compute the following ratios for both companies for the current year and decide which company's shares better fit your investment strategy.
a. Quick ratio
b. Inventory turnover
c. Days€™ sales in receivables€ƒ
d. Debt ratio
e. Earnings per share of common shares
f. Price/earnings ratio

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Bob's Home Repair, Inc. Stellar Stability, Corp Income from Operations Interest Expense. Net Income . Net Sales (all on credit).$282,000 158,000 88,000 15,000 44,000 $226,000 129,000 48,000 24,000 Bob's Home Repair, Inc. Stellar Stability, Corp Current Assets: $13,000 12,000 30,000 69,000 5,000 129,000 201,000 54,000 80,000 18,000 Cas Short-Term Investments... Accounts Receivable, Net... Inventory Prepaid Expenses S 14,000 15,000 25,000 50,000 4,000 108,000 166,000 68,000 71,000 Total Current Liabilities. Total Liabilities.... Preferred Shares, 5%, 180 shares Common Shares, 7,000 Share. 7,000 10,000 Total Shareholders' Equity..121,000 $ 43.12 4,000 Shares 95,000 S 30.87 Market price per common share.. Bob's Home Repair, Inc. Stellar Stability, Corp. 26,000 62,000 157,000 Accounts Receivable, Net S 29,000 52,000 Total Assets....162,000 18,000 Preferred Shares, 5% (180 shares) Common Shares, 7,000 Share 7,000 10,000 77,000 4,000 Shares.. Total Shareholders' Equity 72,000