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 Very Network, Inc and have assembled the following data. (Click to view the income statement data.) (Cuck to view the balance sheet and market price data) Your strategy is to invest good shape financially A depends on the results o Read the requirements. 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 = 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 ) Requirement 1b. Compute the inventory turnover for both companies for the current year. Begin by selecting the formula to compute the inventory turnover Inventory tumover = Now, compute the inventory turnover for both companies. (Round your answers to two decimal places, 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 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 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 =(NetincomePreferreddividends)+Weightedaveragenumberofcommonshareoufstanding Requirement 1f. Compute the price/earnings ratio for both companies for the current year Begin by selecting the formula to compute the pricelearnings ratio. Pricelearnings 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, XX ) 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 Requirement 10. Computo the dividend payout for both companies for the cument year. Begin by selecting the formula to compute the dividend payout Dividend poyout = Aanual dividend per share - Eathen per share Requirement 2. Decde which compeny's stock better tes vour nvestrents strated the mejorty of the ratios, Best Digtal ochs better than Vory Zose? Data table Data table Data table Data table Selected balance sheet and market price data at the end of the current year. e eje0
