Assume that you are purchasing an investment and have decided to invest in a company in the digital phone business. Your strategy is to invest in companies that have low price/earnings ratios but appear to be in good shape You have narrowed the choice to Best Digital Corp. and Every Network, Inc. and have assembled the following data. nancially. Assume that you have analyzed all other factors and that your decision depends on the results of 3 (Click to view the income statement data.) ratlo analysts. a (Click to view the balance sheet and market price data.) Read the muirements. E) 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 = (Cash + Short-term investments + Accounts receivable, net) + Total current liabilities Now, compute the acid-test ratio for both companies. (Round your answers to two decimal places, X.XX.) Best Digital Every Network Acid-test ratio 1 0.80 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 = Cost of goods sold + Average merchandise inventory Now, compute the inventory tumover for both companies. (Round your answers to two decimal places, XXX.) Best Digital Every Network Inventory turnover 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 = 365 + Accounts receivable turnover ratio | Now, compute the days' sales in receivables for both companies. (Round interim calculations to two decimal places and your nal answers to the nearest whole day.) Best Digital Every Network Days' sales in receivables I 34.14 35.85 Assume that you are purchasing an investment and have decided to invest in a company in the digital phone business. Your strategy is to invest in companies that have low price/earnings ratios but appear to be in good shape You have narrowed the choice to Best Digital Corp. and Every Network, Inc. and have assembled the following data. financially. Assume that you have analyzed all other factors and that your decision depends on the results of (Click to view the income statement data.) ratio analysis. (Click to view the balance sheet and market price data.) requirements. 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 Total liabilities + Total asset Now, compute the debt ratio for both companies. (Round your answers to the one tenth of a percent, X.X%.) Best Digital Every Network Debt ratio 0.40 % 0.41 % 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 (Net income - Preferred dividends) + Weighted average number of common share outstanding Now, compute the earnings per share of common stock for both companies. (Round your answers to the nearest cent.) Best Digital Every Network Earnings per share of common stock 5.8 4.53 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 = Market price per share of common stock + Earnings per share Now, compute the price/earnings ratio for both companies. (Round interim and final answers to two decimal places, X.XX.) Best Digital Every Network Price/earningAssume that you are purchasing an investment and have decided to invest in a company in the digital phone business. Your strategy is to invest in companies that have low price/earnings ratios but appear to be in good shape You have narrowed the choice to Best Digital Corp. and Every Network, Inc. and have assembled the following data. inanniAlly Assumes that you have Andweed all other factor and that your decision depends on the moulds of (Click to view the income statement data.) X (Click to view the balance sheet and market price data.) Data table Selected income statement data for the current year: Begin by selecting the formula to compute the earnings per share of common stock. Best Digital Every Network Earnings per share Net Sales Revenue (all on credit) $ 416, 100 $ 493, 115 of common stock = (Net income - Preferred dividends) + Weighted average number of common share outstanding Cost of Goods Sold 211,000 255,000 Now, compute the earnings per share of common stock for both companies. (Round your answers to the nearest cent.) Interest Expense 0 15,000 Best Digital Every Network Net Income 58,000 66,000 Earnings per share of common stock 5.8 4.53 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. Print Done Price/earnings ratio Market price per share of common stock + Earnings per share Now, compute the price/earnings ratio for both companies. (Round interim and final answers to two decimal places, X.XX.) Best Digital Every Network Price/earnings ratio 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 Annual dividend per share + Earnings per share 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%.) Best Digital Every Network Dividend payout 1% % 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,Data table Selected balance sheet and market price data at the end of the current year: Best Digital Every Network Current Assets: Cash 24,000 $ 22,000 Short-term Investments 41,000 20,000 Accounts Receivables, Net 36,000 47,000 Merchandise Inventory 65,000 96,000 18,000 17,000 184,000 $ 202,000 Prepaid Expenses Total Current Assets Total Assets 262,000 $ 324,000 Total Current Liabilities 102,000 100,000 Total Liabilities 102,000 134,000 Common Stock: $1 par (10,000 shares) 10,000 $2 par (17,000 shares) 34,000 Total Stockholders' Equity 160,000 190,000 Market Price per Share of Common Stock 92.80 104.76 Dividends Paid per Common Share 0.80 0.70 Selected balance sheet data at the beginning of the current year: Best Digital Every Network Balance sheet: Accounts Receivables, net 41,000 $ 49,000 Merchandise Inventory 85,000 86,000 Data table Short-term Investments 41 ,000 20,000 Accounts Receivables, Net 36,000 47,000 Merchandise Inventory 65,000 96,000 18,000 17,000 184,000 $ 202,000 Prepaid Expenses Total Current Assets Total Assets 262,000 $ 324,000 Total Current Liabilities 102,000 100,000 Total Liabilities 102,000 134,000 Common Stock: $1 par (10,000 shares) 10,000 $2 par (17,000 shares) 34,000 Total Stockholders' Equity 160,000 190,000 Market Price per Share of Common Stock 92.80 104.76 Dividends Paid per Common Share 0.80 0.70 Selected balance sheet data at the beginning of the current year: Best Digital Every Network Balance sheet: Accounts Receivables, net 41,000 $ 49,000 Merchandise Inventory 85,000 86,000 Total Assets 259,000 271,000 Common Stock: $1 par (10,000 shares) 10,000 $2 par (17,000 shares)