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 Digitalized Corp and Every Zone Inc. and have assembled the following data.

Selected income statement data for the current year:

	Better Digital	Very Zone
Net Sales Revenue (all on credit)	$417,925	$497,860
Cost of Goods Sold	206,000	255,000
Interest Expense	0	16,000
Net Income	49,000	68,000

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Selected balance sheet and market price data at the end of the current year:

	Better Digital	Very Zone
Current Assets:
Cash	$24,000	$17,000
Short-term Investments	38,000	20,000
Accounts Receivables, Net	36,000	49,000
Merchandise Inventory	65,000	98,000
Prepaid Expenses	18,000	14,000
Total Current Assets	$181,000	$198,000
Total Assets	$260,000	$325,000
Total Current Liabilities	100,000	99,000
Total Liabilities	100,000	132,000
Common Stock:
$1 par (10,000 shares)	10,000
$2 par (17,000 shares)		34,000
Total Stockholders' Equity	160,000	193,000
Market Price per Share of Common Stock	93.10	108.00
Dividends Paid per Common Share	0.60	0.20

Selected balance sheet data at the beginning of the current year:

	Better Digital	Very Zone
Balance sheet:
Accounts Receivables, net	$43,000	$53,000
Merchandise Inventory	81,000	88,000
Total Assets	258,000	277,000
Common Stock:
$1 par (10,000 shares)	10,000
$2 par (17,000 shares)		34,000

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.)

	Digitalized	Every Zone
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

=

Cost of goods sold Average merchandise inventory

Now, compute the inventory turnover for both companies. (Round your answers to two decimal places, X.XX.)

	Digitalized	Every Zone
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 final answers to the nearest whole day.)

	Digitalized	Every Zone
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

=

Total liabilities Total asset

Now, compute the debt ratio for both companies. (Round your answers to the one tenth of a percent, X.X%.)

	Digitalized		Every Zone
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	=	(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.)

	Digitalized	Every 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

=

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.)

	Digitalized	Every Zone
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%.)

	Digitalized		Every Zone
Dividend payout		%		%