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- X Data Table Selected income statement data for the current year: $ Digital Plus 420,115 $ 211,000 Net Sales Revenue (all on credit) Cost of Goods Sold Interest Expense Net Income Very Zone 494,940 256,000 15,000 72,000 0 60,000 Print Done - X Data Table $ Selected balance sheet and market price data at the end of the current year. Digital Plus Very Zone Current Assets: Cash $ 27,000 $ 20,000 Short-term Investments 37,000 15,000 Accounts Receivables, Net 36,000 48,000 Merchandise Inventory 69,000 99,000 Prepaid Expenses 22,000 17,000 $ Total Current Assets 191,000 $ 199,000 Total Assets $ 261,000 $ 325,000 Total Current Liabilities 100,000 98,000 Total Liabilities 100,000 128,000 Common Stock: $1 par (11,000 shares) 11,000 $2 par (14,000 shares) 28,000 Total Stockholders' Equity 161,000 197,000 Market Price per Share of Common Stock 76.30 128.50 Dividends Paid per Common Share 0.80 0.50 $ Selected balance sheet data at the beginning of the current year: Digital Plus Very Zone Balance sheet: Accounts Receivables, net Merchandise Inventory Total Assets Common Stock: $1 par (11,000 shares) $2 par (14,000 shares) 42,000 $ 81,000 257,000 52,000 88,000 270,000 11,000 28,000 Print Done Requirements 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. Pricelearnings ratio g. Dividend payout 2. Decide which company's stock better fits your investment strategy Print Done This Question: 8 pts 10 of 22 (0 complete) This Test: 50 pts possible Question Help 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 Digital Plus Corp. and Very Zone, Inc. and have assembled the following data. E: (Click to view the income statement data.) (Click to view the balance sheet and market price 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. 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 = Now, compute the acid-test ratio for both companies. (Round your answers to two decimal places, X.XX.) Digital Plus Very Zone 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 Now, compute the inventory turnover for both companies. (Round your answers to two decimal places, X.XX.) Digital Plus Very Zone 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 Days' 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.) Digital Plus Very Zone Days' sales in receivables 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, X.X%.) Very Zone Digital Plus % 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.) Digital Plus Very Zone 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 pricelearnings ratio. Price/earnings ratio Now, compute the pricelearnings ratio for both companies. (Round interim and final answers to two decimal places, X.XX.) Digital Plus Very Zone Price/earnings ratio 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 Now, compute the dividend payout for both companies. (Round interim answers to two decimal places, X.XX, and your final answers to the nearest whole percent, X%) Digital Plus Very Zone Dividend payout % % Requirement 2. Decide which company's stock better fits your investments strategy. common stock seems to fit the investment strategy better. Its pricelearnings ratio is On the majority of the ratios, and
