K Assume that you are purchasing an investment and have decided to invest in a company in the smartphone business. You have narrowed the choice to Digitized Electronics or Very Zone Electronics and have assembled the following data. Selected income statement data for the current year follows. (Click to view the income statement data.) Selected balance sheet data at the beginning of the current year follow: (Click to view the balance sheet data.) Selected balance sheet and market-price data at the end of the current year follow. (Click to view the market price 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. Read the requirement (Enter any percentages as decimals in this format, XXX Round your answers to two decimal places.) Digitized a. Acid-test ratio Very Zone (Click to view the income statement data.) Income statement - X Digitized Very Zone Net sales (all on credit).. 401,500 $ 511,000 Cost of goods sold. $ 209,000 $ 255,000 Interest expense Net income.. $ 18,500 $ 49,000 $ 64,400 Print Done 13 Balance sheet and market price data - Digitized Very Zone Current receivables, net.. $ 34,300 $ 40,700 Inventories.. $ 86,000 $ 82,500 Total assets... $ 258,000 $ 273,000 Common stock: $1 par, (10,000 shares).. $ 10,000 Common stock: $1 par, (14,000 shares)... $ 14,000 Print Done Balance sheet and market price data - ra E Current assets: or ec Digitized Very Zone Cash $ 30,500 $ 20,500 Short-term investments $ 52,220 $ 22,200 Current receivables, net $ 35,000 $ 44,000 Inventories $ 66,000 $ 105,000 $ 2,280 $ 4,300 Prepaid expenses Total current assets $ 186,000 $ 196,000 Total assets.. $ 436,000 $ 272,000 Total current liabilities.... $ 109,000 $ 102,000 Total liabilities.. $ 109,000 $ 136,000 Common stock: $1 par, (10,000 shares).. $ 10,000 Common stock: $1 par, (14,000 shares)... $ 14,000 Total stockholders' equity.... ...... $ 327,000 $ 136,000 Market price per share of common stock $ 73.50 $ 85.10 Requirement Compute the following ratios for both companies for the current year and decide which company's stock better fits your investment strategy. Assume all sales are on credit. a. Acid-test ratio b. Inventory turnover c. Days' sales in average receivables d. Debt ratio e. Gross profit percentage f. Earnings per share of common stock g. Price/earnings ratio Print Done