Assume that you are purchasing an investment and have decided to invest in a company in the digital phone business. You have Your strategy is to invest in companies that have low price/earnings ratios but appear to be in good shape financially. Assume that narrowed the choice to Digitized Corp. and Zone Network, Inc. and have assembled the following data. you have analyzed all other factors and that your decision depends on the results of ratio analysis. (Click to view the income statement data.) Read the requirements. (Click to view the balance sheet and market price data.) 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.) Digitized Zone Network 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.) Digitized Zone 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 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.) Digitized Zone Network Days' sales in receivablesRequirement 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, X.X%.) Digitized Zone Network Debt ratio |% 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.) Digitized Zone Network 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.) Digitized Zone Network Price/earnings ratioNow, compute the earnings per share of common stock for both companies. (Round your answers to the nearest cent.) Digitized Zone Network 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.) Digitized Zone 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 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%.) Digitized Zone Network Dividend payout % % 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 income statement data for the current year: Digitized Zone Network Net Sales Revenue (all on credit) 423,035 $ 493, 115 Cost of Goods Sold 206,000 260,000 Interest Expense 17,000 Net Income 56,000 66,000Data table Selected balance sheet and market price data at the end of the current year: Digitized Zone Network Current Assets: Cash 28,000 $ 18,000 Short-term Investments 39,000 16,000 Accounts Receivables, Net 35,000 49,000 Merchandise Inventory 67,000 101,000 Prepaid Expenses 17,000 15,000 Total Current Assets 186,000 $ 199,000 Total Assets 264,000 $ 329,000 Total Current Liabilities 100,000 98,000 Total Liabilities 100,000 134,000 Common Stock: $1 par (11,000 shares) 11,000 $2 par (15,000 shares) 30,000 Total Stockholders' Equity 164,000 195,000 Market Price per Share of Common Stock 96.71 114.40 Dividends Paid per Common Share 0.60 0.30 Selected balance sheet data at the beginning of the current year: Digitized Zone Network Balance sheet: Accounts Receivables, net 43,000 $ 50,000 Merchandise Inventory 84,000 90,000Selected balance sheet data at the beginning of the current year: Digitized Zone Network Balance sheet: Accounts Receivables, net 43,000 $ 50,000 Merchandise Inventory 84,000 90,000 Total Assets 260,000 276,000 Common Stock: $1 par (11,000 shares) 11,000 $2 par (15,000 shares) 30,000Requirements 1. Compute the following ratios for both companies for the current year: a. Acid-test ratio b. Inventory turnover c. Days' sales in receivables d. Debt ratio e. Earnings per share of common stock f. Price/earnings ratio g. Dividend payout 2. Decide which company's stock better fits your investment strategy