Summary information from the financial statements of two companies competing in the same industry follows.

Required
1. For both companies compute the

(a) Current ratio,

(b) Acid-test ratio,

(c) Accounts receivable turnover,
(d) inventory turnover,

(e) Days’ sales in inventory,

(f) Days’ sales uncollected. Round to one decimal place. Identify the company you consider to be the better short-term credit risk and explain why.
2. For both companies compute the

(a) Profit margin ratio,

(b) Total asset turnover,

(c) Return on total assets,

(d) Return on equity. Assuming that each company’s stock can be purchased at $75 per share, compute their

(e) Price-earnings ratios

(f) Dividend yields. Round to one decimal place. Identify which company’s stock you would recommend as the better investment and explain why.

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Data from the current year-end balance sheets Assets Cash....... Accounts receivable, net Merchandise Inventory.. Prepaid expenses... Plant assets, net.. Total assets... Liabilities and Equity Current liabilities....... Barco Company Long-term notes payable... Common stock, $5 par value.. Retained earnings..... Total liabilities and equity.. $ 19,500 46,500 84,440 5,000 290,000 $445,440 Kyan Company $ 34,000 64,600 132,500 6,950 304,400 $542,450 $ 61,340 $ 93,300 80,800 101,000 180,000 206,000 123,300 142,150 $445,440 $542,450 Data from the current year's income statement Sales....... Cost of goods sold.. Interest expense.. Income tax expense Net income.... Basic earnings per share.... Cash dividends per share... Beginning-of-year balance sheet data Accounts receivable, net.... Merchandise inventory.. Barco Company Total assets. Common stock, $5 par value. Retained earnings ..... $770,000 585,100 7,900 14,800 162,200 4.51 3.81 $ 29,800 55,600 398,000 180,000 98,300 Kyan Company $880,200 632,500 13,000 24,300 210,400 5.11 3.93 $ 54,200 107,400 382,500 206,000 93,600