P17-284 Using ratios to decide between two stock investments Assume that you are purchasing an investment and have decided to invest in a com- pany in the digital phone business. You have narrowed the choice to Digitalized Corp and Every Zone, Inc. and have assembled the following data Selected income statement data for the current year: Net Sales Revenue (all on credit) Cost of Goods Sold Interest Expense Net Income Digitalized $423,035 210,000 0 51,000 Every Zone $493,845 260,000 19,000 72,000 Selected balance sheet and market price data at the end of the current year Digitalized Every Zone Current Assets: Cash $ 24,000 $ 17,000 Short-term Investments 40,000 14,000 Accounts Receivable, Net 40,000 48,000 Merchandise Inventory 66,000 97,000 Prepaid Expenses 23,000 12,000 Total Current Assets $ 193,000 $ 188,000 Total Assets $ 266,000 $323,000 Total Current Liabilities 105,000 96,000 Total Liabilities 105,000 128,000 Common Stock: $1 par (12,000 shares) 12,000 $1 par (17,000 shares) 17,000 Total Stockholders' Equity 161,000 195,000 Market Price per Share of Common Stock 76.50 114.48 Dividends Paid per Common Share 1.10 1.00 Selected balance sheet data at the beginning of the current year Digitalized Every Zone Balance Sheet: Accounts Receivable, net Merchandise inventory Total Assets Common Stock: $1 par (12,000 shares) $1 par (17,000 shares) $ 41,000 81,000 261,000 $ 54,000 87,000 272,000 12,000 17,000