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 Digital Corp. and Every Zone, 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. - X Data Table 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 (Cash + Short-term investments + Accounts receivable, net) - Total current liabilities = Cash $ 17,000 17,000 Now, compute the acid-test ratio for both companies. (Round your answers to two decimal places, X.XX.) Short-term Investments 28,000 $ 38,000 37,000 64.000 17,000 44,000 Digital Accounts Receivables, Net Merchandise Inventory Every Zone Acid-test ratio 101,000 16,000 Prepaid Expenses $ 184,000 $ Total Current Assets 195,000 - X Total Assets $ 262,000 $ Requirements Data Table 325,000 98,000 Total Current Liabilities Total Liabilities 105,000 105,000 131,000 Selected income statement data for the current year: Common Stock: 12,000 Net Sales Revenue (all on credit) $ Digital 418,290 $ 206,000 d. Every Zone 496,035 257,000 19,000 66,000 Cost of Goods Sold 1. Compute the following ratios for both companies for the current year: a. Acid-test ratio b. Inventory turnover c. Days' sales in receivables Debt ratio e. Earnings per share of common stock f. Price/earnings ratio g. Dividend payout 2. Decide which company's stock better fits your investment strategy $1 par (12,000 shares) $1 par (16,000 shares) Total Stockholders' Equity Market Price per Share of Common Stock Dividends Paid per Common Share 16,000 194,000 103.25 157,000 Interest Expense 0 91.77 Net Income 58,000 1.10 0.80 Selected balance sheet data at the beginning of the current year: Digital Every Zone Print Done Balance sheet: Print Done $ 52,000 38,000 $ 84,000 90,000 261,000 279,000 Accounts Receivables, net Merchandise Inventory Total Assets Common Stock: $1 par (12,000 shares) $1 par (16,000 shares) Enter any number in the edit fields and then click Check Answer. 12,000 16,000 Help Me Solve This e Text Pages Get More Help Clear All Check