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. B (Click to view the income statement data.) Click to view the balance sheet and market price data.) D 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 recolvable, nat) + Total current liabilities Now.compute the acid-test ratio for both companies. (Round your answers to two decimal places, XXX) Better Digital Very Zone Acid-test ratio - Data Table Selected income statement data for the current year: Very Zone Better Digital $ 417,925 $ 209,000 494,940 256,000 Net Sales Revenue (all on credit) Cost of Goods Sold Interest Expense Net Income 0 19,000 66,000 62,000 Print Done Requirements 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. Print Done C-28A (simi... of 15 HW Score: 51.18%, 51.18 of 100 points Score: 15.6 of 30 Save Your strategy is to invest in companios 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. Requirements Data Table X old Selected balance sheet and market price data at the end of the current year: Better Digital Very Zone Current Assets: ye 22,000 18,000 et) NO 47,000 97,000 16,000 200,000 326,000 Cash $ 24,000 $ Short-term Investments 42,000 Accounts Receivables, Net 39,000 Merchandise Inventory 67,000 Prepaid Expenses 22,000 Total Current Assets $ 194,000 $ Total Assets 265,000 $ Total Current Liabilities 104,000 Total Liabilities 104,000 Common Stock: $1 par (10,000 shares) 10,000 $1 par (15,000 shares) Total Stockholders' Equity 161,000 Market Price per Share of Common Stock 93.00 Dividends Paid per Common Share 0.80 Selected balance sheet data at the beginning of the current year. 96,000 129,000 15,000 197,000 118.80 0.60 Better Digital Very Zone Balance sheet: Print Done Merchandise Inventory Prepaid Expenses 67,000 22,000 97.000 16,000 Total Current Assets $ 194,000 $ 200,000 current y bivable, not) wwers to two ory Zone Total Assets $ 265,000 $ 325,000 Total Current Liabilities 104,000 96,000 Total Liabilities 104,000 129,000 Common Stock $1 par (10,000 shares) 10.000 $1 par (15,000 shares) 15,000 Total Stockholders' Equity 161,000 197,000 Market Price per Share of Common Stock 93.00 118.80 Dividends Paid per Common Share 0.80 0.60 Selected balance sheet data at the beginning of the current year: Better Digital Very Zone Balance sheet: Accounts Receivables, not 42,000 $ 51.000 Merchandise Inventory 80,000 87.000 Total Assets 258,000 279.000 Common Stock $1 par (10,000 shares) 10,000 $1 par (15,000 shares) 15,000 Print Done nswer ore Help- Clear A
