Assume that you are considering purchasing stock as an investment. You have narrowed the choice to Disc.com and Holiday Shops and have assembled the following data. Selected income statement data for current year:

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

Selected balance-sheet data at the beginning of the 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.
Requirements
1. Compute 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. Earnings per share of common stock
h. Price-earnings ratio
2. Compute each company's economic-value-added (EVA®) measure and determine whether the companies' EVA®s confirm or alter your investment decision. Each company's cost of capital is 10%. (For this requirement, ignore income taxes (use net income) when computing EVA®.)

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Holiday Shops $514,000 390,000 79,000 16,000 Disc.com $595,000 86,000 64,000 Net sales (all on credit).. Income from operations Interest expense Net income Disc.com Holiday Shops Current assets: 26,000 $ 42,000 12,000 Current receivables, net.... 184,000 162,000 187,000 13,000 416,000 Cash 7,000 217,000 20,000 ...454,000 982,000 Prepaid expenses.. Total current assets Total assets 335,000 Total liabilities Preferred stock: 1096, $100 par Common stock, $1 par (100,000 sares..100,000 670,000 713,000 20,000 $5 par (10,000 shares)... Total stockholders' equity.. Market price per share of common stock.. 50,000 312,000 219,000 6.4066.60 Disc.comHoliday Shops Balance sheet: Current receivables, net Inventories $190,000 194,000 845,000 908,000 309,000 20,000 203,000 Long-term debt. Preferred stock, 1090, $100 par Common stock, $1 par (100,000 shares)...100,000 $5 par (10,000 shares). 50,000 219,000 Total stockholders' equity260,000