Data table

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Selected income statement data for the current year:

	Digital Plus	Every Zone
Net Sales Revenue (all on credit)	$418,290	$498,955
Cost of Goods Sold	210,000	256,000
Interest Expense	0	16,000
Net Income	54,000	72,000

Data table

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Selected balance sheet and market price data at the end of the current year:

	Digital Plus	Every Zone
Current Assets:
Cash	$28,000	$15,000
Short-term Investments	37,000	18,000
Accounts Receivables, Net	37,000	49,000
Merchandise Inventory	69,000	99,000
Prepaid Expenses	17,000	14,000
Total Current Assets	$188,000	$195,000
Total Assets	$262,000	$326,000
Total Current Liabilities	103,000	96,000
Total Liabilities	103,000	131,000
Common Stock:
$1 par (11,000 shares)	11,000
$2 par (17,000 shares)		34,000
Total Stockholders' Equity	159,000	195,000
Market Price per Share of Common Stock	78.56	106.00
Dividends Paid per Common Share	0.90	0.50

Selected balance sheet data at the beginning of the current year:

Question content area bottom

Part 1

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

=

Part 2

Now, compute the acid-test ratio for both companies. (Round your answers to two decimal places, X.XX.)

	Digital Plus	Every Zone
Acid-test ratio

Part 3

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

=

Part 4

Now, compute the inventory turnover for both companies. (Round your answers to two decimal places, X.XX.)

	Digital Plus	Every Zone
Inventory turnover

Part 5

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

=

Part 6

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	Every Zone
Days' sales in receivables

Part 7

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

=

Part 8

Now, compute the debt ratio for both companies. (Round your answers to the one tenth of a percent, X.X%.)

	Digital Plus		Every Zone
Debt ratio		%		%

Part 9

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	=

Part 10

Now, compute the earnings per share of common stock for both companies. (Round your answers to the nearest cent.)

	Digital Plus	Every Zone
Earnings per share of common stock

Part 11

Requirement 1f. Compute the price/earnings ratio for both companies for the current year.

Begin by selecting the formula to compute the price/earnings ratio.

Price/earnings ratio

=

Part 12

Now, compute the price/earnings ratio for both companies. (Round interim and final answers to two decimal places, X.XX.)

	Digital Plus	Every Zone
Price/earnings ratio

Part 13

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

=

Part 14

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		Every Zone
Dividend payout		%		%

Part 15

Requirement 2. Decide which company's stock better fits your investments strategy.

Digital Plus's

Every Zone's

common stock seems to fit the investment strategy better. Its price/earnings ratio is

higher than that of Digital Plus,

higher than that of Every Zone,

lower than that of Digital Plus,

lower than that of Every Zone,

and

Digital Plus appears in better shape financially than Every Zone

Every Zone appears in better shape financially than Digital Plus

. On the majority of the ratios,

Digital Plus looks better than Every Zone.

Every Zone looks better than Digital Plus.