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 Digital Corp. and Very Zone , Inc. and have assembled the following 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.

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.

Now, compute the acid-test ratio for both companies. (Round your answers to two decimal places, X.XX.)

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

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.)

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.)

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.

Now, compute the price/earnings ratio for both companies. (Round interim and final answers to two decimal places, X.XX.)

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%.)

Please see choices below for requirement 2

Now, compute the debt ratio for both companies. (Round your answers to the one tenth of a percent, X.X%.) Requirement 1d. Compute the debt ratio for both companies for the current year. Begin by selecting the formula to compute the debt ratio. Requirement 1g. Compute the dividend payout for both companies for the current year. Beain by selectina the formula to compute the dividend pavout 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, 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. Selected balance sheet data at the beginning of the current year: 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 ac 365 Accounts receivable turnover ratio Acid-test ratio Annual dividend per share Earnings per share Requirement 1b. Co Begin by selecting th (Cash + Cash equivalents) Total current liabilities Inventory turnover ( Cash + Short-term investments + Accounts receivable, net ) Total current liabilities Now, compute the in Cost of goods sold Average merchandise inventory Market price per share of common stock Earnings per share Inventory turnover Requirement 1c. Co (Net income - Preferred dividends) Weighted average number of common share outstanding Begin by selecting th Total current assets Total current liabilities Days' sales in receivi Total liabilities Total asset \begin{tabular}{lcc|} \hline & Digital & Very Zone \\ \hline Earnings per share of common stock & & \\ \cline { 2 - 3 } \end{tabular} 365 Accounts receivable turnover ratio Annual dividend per share Earnings per share ( Cash + Cash equivalents ) Total current liabilities ( Cash + Short-term investments + Accounts receivable, net ) Total current liabilities Cost of goods sold Average merchandise inventory Market price per share of common stock Earnings per share (Net income - Preferred dividends) Weighted average number of common share outstanding Total current assets Total current liabilities Total liabilities Total asset 365 Accounts receivable turnover ratio Annual dividend per share Earnings per share (Cash + Cash equivalents) Total current liabilities ( Cash + Short-term investments + Accounts receivable, net ) Total current liabilities Cost of goods sold Average merchandise inventory Market price per share of common stock Earnings per share (Net income - Preferred dividends) Weighted average number of common share outstanding Total current assets Total current liabilities Total liabilities Total asset 365 Accounts receivable turnover ratio Annual dividend per share Earnings per share (Cash + Cash equivalents) Total current liabilities ( Cash + Short-term investments + Accounts receivable, net ) Total current liabilities Cost of goods sold Average merchandise inventory Market price per share of common stock Earnings per share (Net income - Preferred dividends) Weighted average number of common share outstanding Total current assets Total current liabilities Selected income statement data for the current year: Requirement 1b. Compute the inventory turnover for both companies for the current year. Begin by selecting the formula to compute the inventory turnover. \begin{tabular}{lrr} \hline & Digital & Very Zone \\ \hline Balance sheet: & & \\ Accounts Receivables, net & $2,000$ & 51,000 \\ Merchandise Inventory & 81,000 & 89,000 \\ Total Assets & 261,000 & 270,000 \\ Common Stock: & & \\ $1 par (12,000 shares) & 12,000 & \\ $1 par (17,000 shares) & & 17,000 \\ \hline \end{tabular} 365 Accounts receivable turnover ratio Annual dividend per share Earnings per share (Cash + Cash equivalents) Total current liabilities ( Cash + Short-term investments + Accounts receivable, net ) Total current liabilities Cost of goods sold Average merchandise inventory Market price per share of common stock Earnings per share (Net income - Preferred dividends) Weighted average number of common share outstanding Total current assets Total current liabilities 365 Accounts receivable turnover ratio Annual dividend per share Earnings per share ( Cash + Cash equivalents ) Total current liabilities ( Cash + Short-term investments + Accounts receivable, net ) Total current liabilities Cost of goods sold Average merchandise inventory Market price per share of common stock Earnings per share (Net income - Preferred dividends) Weighted average number of common share outstanding Total current assets Total current liabilities Total liabilities Total asset 365 Accounts receivable turnover ratio Annual dividend per share Earnings per share (Cash + Cash equivalents ) Total current liabilities ( Cash + Short-term investments + Accounts receivable, net ) Total current liabilities Cost of goods sold Average merchandise inventory Market price per share of common stock Earnings per share (Net income - Preferred dividends) Weighted average number of common share outstanding Total current assets Total current liabilities Total liabilities Total asset Now, compute the inventory turnover for both companies. (Round your answers to two decimal places, X.XX.) 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. Digital appears in better shape financially than Very Zone Very Zone appears in better shape financially than Digital Digital looks better than Very Zone. Very Zone looks better than Digital