Assume that you are considering purchasing shares as an investment. You have narrowed the choice to two Internet firms, Video.com Inc. and On-Line Express Ltd., and have assembled the following data. Selected income statement data for current year:

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

Selected balance sheet data at beginning of current year:

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 shares better fit your investment strategy:
a. Quick (acid-test) ratio
b. Inventory turnover
c. Days' sales in receivables
d. Debt ratio
e. Times-interest-earned ratio
f. Return on equity
g. Earnings per share
h. Price/earnings ratio

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Net sales (allon crei) Cost of goods sold Income from o Interest Video $603,000 454,000 93,000 Express $519,000 387,000 12,000 12,000 38,000 56,000 Video Express Current assets: S 39,000 13,000 164,000 183,000 15,000 $414,000 938,000 Cash Short-term i Current receivables, net $2 5,000 6,000 189,000 211,000 Prepaid expenses Total current assets $450,000 $974,000 Total assets Total current liabilities. Total liabilities Preferred shares $4.00 (250 shares). Common shares (150,000 shares) Video 366,000 667,000* Express 338,000 691,000 25,000 aRs_.._ ._.... 150,000 100,000 247,000 9.00 $47.50 (20,000 shares) lotal shhachokkers expity Market price per common share 307,000 Includes long-term debt; Video, $-0- and Express, $350,000 Current receivables, net Inventories Total assets Long-term debt Preferred shares, $4.00 (250 shares) Common shares (150,000 shares) Video $142,000 209,000 842,000 Express $193,000 197,000 909,000 303,000 25,000 150,000 (20,000 shares) 100,000 215,000 Total shareholders' equity 263,000