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. 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 Digitalized Corp. and Zone Network, Inc. and have assembled the following data. (Click to view the income statement data.) (Click to view the balance sheet and market price data.) 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 OX Requirements a. C. 1. Compute the following ratios for both companies for the current year: Acid-test ratio b. Inventory turnover Days' sales in receivables d. Debt ratio Earnings per share of common stock f. Pricelearnings ratio g. Dividend payout 2. Decide which company's stock better fits your investment strategy. e. Print Done 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. 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 Digitalized Corp. and Zone Network, Inc. and have assembled the following data. (Click to view the income statement data.) (Click to view the balance sheet and market price data.) Read the requirements. Requirement 1a. Compute the acid-test ratio for both companies for the current year. Data table Begin by selecting the formula to compute the acid-test ratio. Acid-test ratio Selected balance sheet and market price data at the end of the current year: Digitalized Zone Network Data table Current Assets: Cash S 28,000 $ 17,000 Selected income statement data for the current year: Short-term Investments 38,000 15,000 37,000 Accounts Receivables, Net Zone Network Digitalized 49,000 Merchandise Inventory $ 423,035 $ 493,115 64,000 20,000 100,000 12,000 Net Sales Revenue (all on credit) Cost of Goods Sold Interest Expense 208,000 255,000 Prepaid Expenses $ 187,000 $ 0 193,000 17,000 Total Current Assets Net Income 46,000 70,000 Total Assets $ 265,000 $ 326,000 Total Current Liabilities 104,000 95,000 Total Liabilities 104,000 129,000 Common Stock: Print Done 10,000 $1 par (10,000 shares) $1 par (17,000 shares) Total Stockholders' Equity Market Price per Share of Common Stock Dividends Paid per Common Share 161,000 17,000 197,000 107.12 82.80 1.10 0.80 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. 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 Digitalized Corp. and Zone Network, Inc. and have assembled the following data. (Click to view the income statement data.) (Click to view the balance sheet and market price data.) 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 OX Requirements a. C. 1. Compute the following ratios for both companies for the current year: Acid-test ratio b. Inventory turnover Days' sales in receivables d. Debt ratio Earnings per share of common stock f. Pricelearnings ratio g. Dividend payout 2. Decide which company's stock better fits your investment strategy. e. Print Done 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. 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 Digitalized Corp. and Zone Network, Inc. and have assembled the following data. (Click to view the income statement data.) (Click to view the balance sheet and market price data.) Read the requirements. Requirement 1a. Compute the acid-test ratio for both companies for the current year. Data table Begin by selecting the formula to compute the acid-test ratio. Acid-test ratio Selected balance sheet and market price data at the end of the current year: Digitalized Zone Network Data table Current Assets: Cash S 28,000 $ 17,000 Selected income statement data for the current year: Short-term Investments 38,000 15,000 37,000 Accounts Receivables, Net Zone Network Digitalized 49,000 Merchandise Inventory $ 423,035 $ 493,115 64,000 20,000 100,000 12,000 Net Sales Revenue (all on credit) Cost of Goods Sold Interest Expense 208,000 255,000 Prepaid Expenses $ 187,000 $ 0 193,000 17,000 Total Current Assets Net Income 46,000 70,000 Total Assets $ 265,000 $ 326,000 Total Current Liabilities 104,000 95,000 Total Liabilities 104,000 129,000 Common Stock: Print Done 10,000 $1 par (10,000 shares) $1 par (17,000 shares) Total Stockholders' Equity Market Price per Share of Common Stock Dividends Paid per Common Share 161,000 17,000 197,000 107.12 82.80 1.10 0.80
