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 Best Digital Corp. and Zone Network, Inc. and have assembled the following data.

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 Best Digital Corp. and Zone Network, Inc. and have assembled the following data Your strategy is to invest in companies that have low pricelearnings 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. 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 Zone Network 0.80 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 2.79 Zone Network 2.72 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 Davs' 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.) Best Digital Zone Network Days' sales in receivables Requirement 1d. Compute the debt ratio for both companies for the current year. 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- Now, compute the debt ratio for both companies. (Round your answers to the one tenth of a percent, XX%.) Best Digital 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.) Best Digital 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.) Best Digital Zone Network Pricelearnings ratio Requirement 1g. Compute the dividend payout for both companies for the current year Renin hu selertina the formula to cnmniute the dividend navout Choose from any list or enter any number in the input fields and then continue to the next question. Selected income statement data for the current year: Best Digital Zone Network Net Sales Revenue (all on credit) Cost of Goods Sold Interest Expense Net Income 416,830 S 493,845 257,000 14,000 68,000 208,000 58,000 Current Assets Cash Short-term Investments Accounts Receivables, Net Merchandise Inventory Prepaid Expenses Total Current Assets 15,000 19,000 44,000 99,000 17,000 194,000 325,000 97,000 133,000 28,000 $ 40,000 37,000 64,000 23,000 192,000$ 261,000 $ 105,000 105,000 Total Assets Total Current Liabilities otal Liabilities Common Stock: $1 par (10,000 shares) 10,000 $1 par (15,000 shares) Total Stockholders' Equity Market Price per Share of Common Stock Dividends Paid per Common Share 156,000 81.20 0.90 15,000 192,000 117.78 0.50 Selected balance sheet data at the beginning of the current year: Best Digital Zone Network Balance sheet 53,000 90,000 270,000 41,000 S Accounts Receivables, net Merchandise Inventory Total Assets 85,000 257,000 Common Stock: $1 par (10,000 shares) 51 par (15,000 shares) 10,000 15,000 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 Decide which company's stock better fits your investment strategy 2