Assume that you are purchasing an investment and have decided to invest in a company in the digital phone business. You have narrowed the choice to Better Digital Corp. and Very Zone, Inc. and have assembled the following data. (Click to view the income statement data.) (Click to view the balance sheet and market price data.) 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. Read the requirements. Requirement 1a. Compute the acid-test ratio for both companies for the current year. Begin by selecting the formula to compute the acid-test ratio. Acid-test ratio Now, compute the acid-test ratio for both companies. (Round your answers to two decimal places, X.XX.) Better Digital Very Zone C Acid-test ratio Requirement 1b. Compute the inventory turnover for both companies for the current year. Begin by selecting the formula to compute the inventory turnover. Inventory turnover Now, compute the inventory turnover for both companies. (Round your answers to two decimal places, X.XX.) Very Zone Inventory turnover Better Digital Requirement 1c. Compute the days' sales in receivables for both companies for the current year. Begin by selecting the formula to compute the days' sales in receivable. Days' sales in receivables = Now, compute the days' sales in receivables for both companies. (Round interim calculations to two decimal places and your final answers to the nearest whole day.) Better Digital Very Zone Days' sales in receivables Days' sales in receivables Requirement 1d. Compute the debt ratio for both companies for the current year. Begin by selecting the formula to compute the debt ratio. Debt ratio Now, compute the debt ratio for both companies. (Round your answers to the one tenth of a percent, XX%.) Debt ratio Better Digital Very Zone % % Requirement 1e. Compute the earnings per share of common stock for both companies for the current year. Begin by selecting the formula to compute the earnings per share of common stock. Earnings per share of common stock Now, compute the earnings per share of common stock for both companies. (Round your answers to the nearest cent.) Better Digital Very Zone Earnings per share of common stock Requirement 1f. Compute the price/earnings ratio for both companies for the current year. Begin by selecting the formula to compute the price/earnings ratio. Price/earnings ratio Now, compute the price/earnings ratio for both companies. (Round interim and final answers to two decimal places, X.XX.) Price/earnings ratio Better Digital Very Zone Requirement 1g. Compute the dividend payout for both companies for the current year. Begin by selecting the formula to compute the dividend payout. Dividend payout Now, compute the dividend payout for both companies. (Round interim answers to two decimal places, X.XX, and your final answers to the nearest whole percent, X%.) Dividend payout Better Digital % Very Zone % Requirement 2. Decide which company's stock better fits your investments strategy. common stock seems to fit the investment strategy better. Its price/earnings ratio is and On the majority of the ratios, Time Remaining: 01:51:52 Selected balance sheet and market price data at the end of the current year: Better Digital Very Zone Current Assets: Cash $ 26,000 $ 16,000 Short-term Investments 42,000 15,000 Accounts Receivables, Net 36,000 46,000 Merchandise Inventory 67,000 100,000 23,000 18,000 Prepaid Expenses $ 194,000 $ 195,000 Total Current Assets Total Assets 265,000 $ 323,000 Total Current Liabilities 102,000 97,000 Total Liabilities 102,000 130,000 Common Stock: $1 par (10,000 shares) 10,000 $2 par (14,000 shares) 28,000 Total Stockholders' Equity 163,000 193,000 Market Price per Share of Common Stock 96.00 111.78 Dividends Paid per Common Share 1.10 1.00 Selected balance sheet data at the beginning of the current year: Balance sheet: Accounts Receivables, net Merchandise Inventory Total Assets Better Digital Very Zone 43,000 $ 49,000 81,000 90,000 261,000 271,000 Cash Short-term Investments Accounts Receivables, Net Merchandise Inventory Prepaid Expenses Total Current Assets Total Assets Total Current Liabilities Total Liabilities Common Stock: 69 GA $ 26,000 $ 16,000 42,000 15,000 36,000 46,000 67,000 100,000 23,000 18,000 194,000 $ 195,000 265,000 $ 323,000 102,000 97,000 102,000 130,000 $1 par (10,000 shares) 10,000 $2 par (14,000 shares) 28,000 Total Stockholders' Equity 163,000 193,000 Market Price per Share of Common Stock 96.00 111.78 Dividends Paid per Common Share 1.10 1.00 Selected balance sheet data at the beginning of the current year: Better Digital Very Zone Balance sheet: Accounts Receivables, net $ 43,000 $ 49,000 Merchandise Inventory 81,000 90,000 Total Assets 261,000 271,000 Common Stock: $1 par (10,000 shares) 10,000 $2 par (14,000 shares) 28,000 Data table Selected income statement data for the current year: Better Digital Very Zone Net Sales Revenue (all on credit) $ 420,115 $ 497,130 Cost of Goods Sold 206,000 260,000 Interest Expense Net Income 0 15,000 60,000 68,000 Print Done