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

Required: For both companies compute the (a) current ratio, (b) acid-test ratio, (c) accounts (icluding notes) receivable turnover, (d) inventory turnover, (e) days sales in inventory, and (f) days sales uncollected. (Use 365 days a year. Do not round intermediate calculations.)

Identify the company you consider to the better in managing short-term credit risk.

o Barco Company

o Kyan Company

Data from the current year-end balance sheets Assets Cash Accounts receivable, net Current notes receivable (trade) Merchandise inventory Prepaid expenses Plant assets, net Total assets Liabilities and Equity Current liabilities Long-term notes payable Common stock, $5 par value Retained earnings Barco Kyan Company Company Total liabilities and equity $21,500 $ 36,000 33,400 9,100 84,440 5,500 310,000 $ $ Data from the current year's income statement Sales Cost of goods sold 52,400 Interest expense 7,600 136,500 Net income 7,550 311,400 463,940 $551,450 $61,340 $ 94,300 85,800 107,000 180,000 136,800 463,940 Income tax expense Basic earnings per share 246,000 Total assets 104,150 Common stock, $5 par value Barco Kyan Company Company Beginning-of-year balance sheet data Accounts receivable, net Current notes receivable (trade) Merchandise inventory $551,450 Retained earnings $810,000 $907,200 591,100 636,500 8,900 15,569 194,431 5.40 16,000 25,045 229,655 4.67 $ 30,800 0 63,600 111,400 398,000 412,500 180,000 246,000 $ 52,200 0 127,300 98,600 Company Choose Numerator: Barco Kyan Current Ratio 1 Choose Denominator: / 1 1 || = = = Current Ratio Current Ratio to 1 to 1 Company Barco Kyan + Barco Kyan + + Choose Numerator: 1 Acid-Test Ratio 1 + + Company Choose Numerator: Choose Denominator: 1 + Accounts Receivable Turnover 1 1 1 11 = = = Choose Denominator: Acid-Test Ratio = Acid-test ratio II || Accounts Receivable Turnover Accounts Receivable Turnover times times to 1 to 1 Company Choose Numerator: Barco Kyan Company Choose Numerator: Barco Kyan Inventory Turnover 1 Choose Denominator: / 1 1 I 1 1 1 Days' Sales in Inventory Choose Denominator: X X II X = II X Days || Inventory Turnover Inventory Turnover 11 = II = times times Days' Sales in Inventory Days' Sales in Inventory days days Company Choose Numerator: Barco Kyan Days' Sales Uncollected 1 Choose Denominator: X / 1 / X X X Days 11 = = 11 Days' Sales Uncollected Days' Sales Uncollected days days