Assume that you are purchasing an investment and have decided to invest in a Your strategy is to invest in companies that have low priceleanings ratios but company in the digital phone business. You have narrowed the choice to Best Digital, Corp. and Very Network, Inc, and have assembled the following factors and that your decision depends on the results of ratio analysis. data: appear to be in good shape financially. Assume that you have analyzed all other Read the requirements, (Click to view the income statement data.) EEB (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(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. XXX.) Best Digital 1.03 Very Network Acid-test ratio 0.82 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.) Best Digital Very Network Inventory turnover 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. Pricelearnings ratio g Dividend payout 2. Decide which company's stock better fits your investment strategy Print Done Assume that you are purchasing an investment and have decided to invest in a Your strategy is to invest in companies that have low pricelearnings ratios but company in the digital phone business. You have narrowed the choice to Best Digital, Corp, and Very Network, Inc, and have assembled the following factors and that your decision depends on the results of ratio analysis appear to be in good shape financially.Assume that you have analyzed all other Read the requirements. Click to view the income statement data.) 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 (Cash + Now, compute the acid-test Data Table Acid-test ratio Requirement 1b. Compute Begin by selecting the formula Inventory turnover Now, compute the inventory Selected balance sheet and market price data at the end of the current year Best Digital Very Network Current Assets: Cash Short-term Investments Accounts Receivables, Net Merchandise Inventory Prepaid Expenses Total Current Assets 28,000 S 37,000 38.000 67,000 19.000 89,000 262,000 S 100,000 100,000 13,000 14,000 49,000 102.000 12.000 195.000 Inventory turnover Total Assets Total Current Liabilities Total Liabilities Common Stock, $1 par (13,000 shares) $2 par (17,000 shares) Total Stockholders' Equity Market Price per Share of Common Stock$ Dividends Paid per Common Share 99.000 133.000 71.55 $ 0.60 $ 191,000 114.48 0.20 Selected balance sheet data at the beginning of the current year Best DigitalVery Network Balance sheet Accounts Receivables, net Merchandise Inventory Total Assets 39,000 $ 50,000 87,000 277,000 83.000 Common Stock, $1 par (13,000 shares) 13,000 $2 par (17,000 shares) 34,000 Print Done P15-32A (similar to) Question Help Assume that you are purchasing an investment and have decided to invest in Your strategy is to invest in companies that have low pricelearnings ratios but company in the digital phone business. You have narrowed the choice to Best Digital, Corp. and Very Network, Inc. and have assembled the following factors and that your decision depends on the results of ratio analysis. data: appear to be in good shape financially. Assume that you have analyzed all other Read the reauirements EEB (Click to view the income statement data.) EEB (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(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 VeryNetwork 1.03 0.82 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.) Best Digital Very Network Inventory turnover Data Table Selected income statement data for the current year: Best Digital Very Network Net Sales (all on credit) Cost of Goods Sold Interest Expense Net Income 493,845 260,000 14,000 72,000 423,035 212,000 62,000 Print Done