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 SW Electronics or Nahla Electronics 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:

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/ earningsratio

Transcribed Image Text:

Nahla Net sales (all on credit.$423,400 $518,300 $207,000 $221,000 s20,000 Net incomee 63.600 $ 78,000 SW Cost of goods sold Interest expense SW Nahla Current receivables, net.36,000 S 44,540 Inventories Total assetsme258,000 $274,000 Common stock: $74,750 56,500 $1 par, (12,000 shares)12,000 $1 par, (15,000 shr 15,000 SW Nahla Current assets: Cash nemnsr28,500 22,500 Current receivables, net Inventories Prepaid expenses Total current assets 36,500 $ 43,500 69,000 $106,000 S 4,940 14,520 $179,000 $205,000 .$412,000 $327,500 $103,000 96,000 $103,000 $131,000 Total current liabilities Total liabilities Common stock $1 par, (12,000 shares) $1 par, (15,000 shares) Total stockholders' equity 12,000 15,000 $309,000 196,500 79.50 $ 91.00 Market price per share of common stock.....