Using business memo format explain to the Chief Accounting Officer and Chief Financial Officer why...
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Accounting
Using business memo format explain to the Chief Accounting Officer and Chief Financial Officer why you made your decision. Be specific, identify and describe the key ratios which influenced your decision. In your explanation refer to your ratio analysis and external sources for support to justify your decision:
Best Digital
Very Zone
Acid-test ratio
0.96
0.85
Best Digital
Very Zone
Inventory turnover
2.82
2.79
Best Digital
Very Zone
Days' sales in receivables
34
36
Best Digital
Very Zone
Debt ratio
39.6
%
40.1
%
Best Digital
Very Zone
Earnings per share of common stock
$5.60
$4.93
Best Digital
Very Zone
Price/earnings ratio
18
25
Best Digital
Very Zone
Dividend payout
20
%
14
%
Best Digital's common stock seems to fit the investment strategy better. Its price/earnings ratio is lower than that of Very Zone,
and Best Digital appears in better shape financially than Very Zone. On the majority of the ratios, Best Digital looks better than Very Zone.
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