Assume that you 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 Zone Network,Inc., and have assembled the following data:

Selected income statement data for the current year:

	Digitalized	Zone Network
Net sales (all on credit). . . . . . . . . . . .	$423,035	$493,115
Cost of goods sold. . . . . . . . . . . . . . . . .	206,000	258,000
Interest expense. . . . . . . . . . . . . . . . . .	--	19,000
Net income. . . . . . . . . . . . . . . . . . . . . .	54,000	66,000

Digitalized	Zone Network
Current assets:
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . .	$23,000	$21,000
Short-term investments. . . . . . . . . . . . . .	38,000	19,000
Current receivables, net. . . . . . . . . . . . .	38,000	43,000
Inventories. . . . . . . . . . . . . . . . . . . . . . .	64,000	96,000
Prepaid expenses. . . . . . . . . . . . . . . . .	21,000	13,000
Total current assets. . . . . . . . . . . . . . . .	$184,000	$192,000
Total assets. . . . . . . . . . . . . . . . . . . . . . . .	$266,000	$326,000
Total current liabilities. . . . . . . . . . . . . . . . .	102,000	96,000
Total liabilities. . . . . . . . . . . . . . . . . . . . . . .	102,000	131,000
Common stock, $1 par (12,000 shares)	12,000
$2 par (16,000 shares)		32,000
Total stockholders' equity. . . . . . . . . . . . .	$164,000	$195,000
Market price per share of common stock. . . .	$76.50	$94.99
Dividends paid per common share. . . . . . . .	$0.50	$0.40

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

	Digitalized	Zone Network
Balance sheet:
Current receivables, net. . . . . . . . . . .	$44,000	$53,000
Inventories. . . . . . . . . . . . . . . . . . . .	80,000	86,000
Total assets. . . . . . . . . . . . . . . . . . .	262,000	276,000
Common stock, $1 par (12,000 shares)	12,000
$2 par (16,000 shares)		32,000

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.

Compute the following ratios for both companies for the current year, and decide which company's stock better fits your investment strategy.
	a.	Acid-test ratio
	b.	Inventory turnover
	c.	Days' sales in average receivables
	d.	Debt ratio
	e.	Earnings per share of common stock
	f.	Price/earnings ratio
	g.	Dividend payout