Question

-mework: Homework: Financial Statement Analysis : 0.12 of 1 pt 1 of 1 1 complete HW Score: 12%, 0.12 Help PMC-28A Data Table Data Table fancialy me that you are put mave narrowed the Click to view the in Click to view the Selected income statement data for the current year: R Selected balance sheet and market price data at the end of the current year Best Digital Zone Network uirement 1a. Como in by selecting the $ Net Sales Revenue (all on credit) Cost of Goods Sold Interest Expense Net Income Best Digital Zone Network 418.290 S 493, 115 211,000 258,000 0 15.000 50.000 66,000 24,000 $ 43.000 21,000 15,000 48,000 -test ratio compute the acid 30.000 68,000 21,000 195,000 $ 99,000 18,000 Print Done s 201.000 -test ratio $ 323.000 quirement Current Assets Cash Short-term Investments Accounts Receivables, Net Merchandise Inventory Prepaid Expenses Total Current Assets Total Assets Total Current Liabilities Total Liabilities Common Stock $1 par (11.000 shares) $1 par (15,000 shares) Total Stockholders' Equity Market Price per Share of Common Stock Dividends Paid per Common Share Requirements 262,000 $ 104.000 104.000 99,000 133,000 in by sele wentorytur 11.000 ow, comput 2 15.000 verlorytur 1. Compute the following ratios for both companies for the current year Asbest ratio b. Inventory turnover c. Duys' sales in receivables d. Debratio e. Earings per share of common stock Pricelarnings ratio 9. Dividend payout 2. Decide which company's stock better fits your investment strategy 158.000 86.45 1.20 190.000 90.80 100 Print Done for any nu Check Answer 1 Done Print Clear A remain MacBook Pro G Search or type URL & 5. 6 7 8 9

Answer 1

1 A .

1.)Actually the company with acid tests ratio more than 1 is better than the company acid test ratio less than 1

2.)Here the best digital acid test ratio is more than 1 so we can opt best digital company for the purpose of investment because of high liquidity.

1B.

The inventory turnover for best digital is

Cost of goods sold ÷average inventory i.e.,

211,000÷68000= 3.1029

The inventory turnover for zone network is

Cost of goods sold ÷ average inventory i.e.,

258000÷99000=2.6060

By observing the above we can know that best digital also have high inventory turnover ratio .

Thus we can invest in best digital company as it is having good liquidity and good earnings .