Question

can i please get help please provide step by step

ective 4 common stock appears to have P15.284 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 distal phone business. You have narwed the choice to Digitalized Corp and Every Zone, Inc. and have assembled the following data Selected income statement data for the current year 54.25 Net Sales Revenue (all on credit) Cost of Goods Sold Interest Expense Net Income Digitalized Every Zone S423,0355 493,845 210,000 260,000 19,000 51.000 72,000 Selected balance sheet and market price data at the end of the current year: Digitalized Every Zone Current Assets: Cash Short-term Investments Accounts Receivable, Net Merchandise Inventory Prepaid Expenses Total Current Assets Total Assets Total Current Liabilities Total Liabilities Common Stock: $1 par (12,000 shares) $1 par (17,000 shares) Total Stockholders' Equity Market Price per Share of Common Stock Dividends Paid per Common Share $ 24,000 40,000 40,000 66,000 23,000 $ 193,000 $ 266,000 105,000 105,000 $ 17,000 14,000 48,000 97,000 12,000 $ 188,000 $ 323,000 96,000 128,000 12,000 161,000 76.50 1.10 17,000 195,000 114.48 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

Answer 1

Particulars Cash Short term investment Accounts receivable Liquid assets Current liablities Acid-test Ratio Digitalized Every Zone $ 24,000.00 $ 17,000.00 $ 40,000.00 $ 14,000.00 $ 40,000.00 $ 48,000.00 $1,04,000.00 $ 79,000.00 $1,05,000.00 $ 96,000.00 0.99 0.82 Acid test ratio = Cash & cash equivalents + Marketable securities + Accounts receivable / Current liabilities Cost of goods sold Beginning inventory Ending inventory Average inventory Inventory turnover ratio $2,10,000.00 $ 2,60,000.00 $ 81,000.00 $ 87,000.00 $ 66,000.00 $ 97,000.00 $ 73,500.00 $ 92,000.00 2.86 2.83 Inventory turnover ratio = Cost of goods sold / average inventory Average inventory = Beginning inventory + Ending inventory / 2 Net credit sales Beginning accounts receivable Ending accounts receivable Average account receivable Accounts receivable turnover ratio $4,23,035.00 $4,93,845.00 $ 41,000.00 $ 54,000.00 $ 40,000.00 $ 48,000.00 $ 40,500.00 $ 51,000.00 10.45) 9.68 365 Number of days in an year Days sales in receivables 365 37.69 34.94 Days sales in receivables ratio = 365 / accounts receivable turnover ratio Accounts receivable turnover ratio = Net credit sales / average net accounts receivable * 100 Total Liabilities Shareholder's equity Debt-Equity ratio $1,05,000.00 $1,61,000.00 0.65 $1,28,000.00 $1,95,000.00 0.66 Debt-equity ratio = Total Liabilities/ Shareholders equity Net income Number of common shares outstanding Earnings of common stock ratio $ 51,000.00 $ 72,000.00 12000 17000 $ 4.25 $ 4.24 Earnings per share of common stock ratio = Net income - preferred dividend / Number of common shares outstanding $ Market value per share Earnings per share Price/earnings ratio IS 76.50 $ 4.25 $ 18.00 $ A 251 114.48 4.24 27.00 Price/earnings ratio = Market value per share/ earnings per share 1.00 Annual dividend per share Earnings par share Dividend payout ratio 1.10 4.25 0.26 $ $ 4.24 0.24 Dividend payout ratio = Annual dividend per share / Earnings per share The earnings per share of common stock ratio is hogh in the company D comparing to the company EZ. Therefore, D's stock is better for the 2 investment.