Question

Homework: Assignment 4 - Chap 14 - ratio analysis Save Score: 0 of 1 pt 10 of 13/8 completely HW Score: 46.15%, 6 of 13 pts P14-38A (book/static) Question Help Assume that you are purchasing an einer and have decided to invest in a company in the smartphone business. Your strategy is to invest in companies that have low price rings ratios but appear to be in good shape Francialy You have arrowed the choice is Best Dialectronics or Zone Network Electronics and have assented the following Arumerul you have analyzed other factors and that your decision depends on the rest of this Click to view the income mento) Read the more enter any percentage as decimals in this format. XXX Round your answers to two decimo Click to view the balance sheet and market price data) Best Digital Zone Nutwork Modesta Enter any number in the ed elds and then click Check Answer 7 Parta Clour Al remaining Check Answer

Answer 1

Dear Student, As HOMEWORKLIB Q&A Guidelines only four parts can be answered,

Best digital

1. Acid Test ratio= Quick Assets/ Current liabilities

Quick Assets= Total current Assets-Inventories--Prepaid Expenses

Quick Assets= 180,000-72,000-4,890

Quick Assets= 103,110

Current Liabilities= 102,000

Ratio= 103,110/102,000

Ratio= 1.01:1

2. Inventory turnover= Sales/Average Inventory

Inventory Turnover= 467,200/{73,000+72,000}/2

Inventory Turnover= 467,200/72,500

Inventory turnover= 6.44 Times

3. Days Sales in Average receivables= 365/Accounts Receivable Turnover

Accounts Receivable Turnover= Net credit Sales/Average Account Receivable

=> 467,200/{45,060+37,500}/2

=> 467,200/41,280

=> 11.31 times

Ratio= 365/11.31

=> 32.27 Days

4. Debt Ratio= Total Liabilities/Total Assets

=> 102,000/300,000*100

=> 34%

For Zone Network

1. Acid Test ratio= Quick Assets/ Current liabilities

Quick Assets= Total current Assets-Inventories--Prepaid Expenses

Quick Assets= 187,000-103,000-6,100

Quick Assets= 77,900

Current Liabilities= 95,000

Ratio= 77,900/95,000

Ratio= 0.82:1

2. Inventory turnover= Sales/Average Inventory

Inventory Turnover= 569,400/{73,000+103,000}/2

Inventory Turnover= 569,400/88,000

Inventory turnover= 6.47 Times

3. Days Sales in Average receivables= 365/Accounts Receivable Turnover

Accounts Receivable Turnover= Net credit Sales/Average Account Receivable

=> 569,400/{53,780+44,500}/2

=> 467,200/49,140

=> 9.50 times

Ratio= 365/9.50

=> 38.42 Days

4. Debt Ratio= Total Liabilities/Total Assets

=> 143,000/325,000*100

=> 44%