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 Best Digital, Corp., and Every Zone, Inc., and have assembled the following data.
Selected income statement data for the current year:
Best Digital Every Zone
Net sales (all on credit) $420,115 $498,955
Cost of goods sold $210,000 $256,000
Interest expense — $16,000
Net income $48,000 $74,000
Selected balance sheet and market price data at the end of the current year:
Best Digital Every Zone
Current assets:
Cash $25,000 $23,000
Short-term investments $42,000 $21,000
Current receivables, net $42,000 $52,000
Inventories $69,000 $105,000
Prepaid expenses $19,000 $14,000
Total current assets $197,000 $215,000
Total assets $268,000 $331,000
Total current liabilities . $102,000 $100,000
Total liabilities . $102,000 $128,000
Common stock, $1 par (15,000 shares) $15,000
$1 par (16,000 shares) $16,000
Total stockholders’ equity $166,000 $203,000
Market price per share of common stock $48.00 $115.75
Dividends paid per common share $2.00 $1.80
Selected balance sheet data at the beginning of the current year:
Best Digital Every Zone
Balance sheet:
Current receivables, net $47,000 $56,000
Inventories $83,000 $92,000
Total assets $261,000 $274,000
Common stock, $1 par (15,000 shares)