A.)
B.)
Summary information from the financial statements of two companies competing in the same industry follows. Barco Kyan Barco Kyan Company Company Company Company Data from the current year-end balance sheets Data from the current year's income statement Assets Sales $790,000 $925,200 Cash $ 20,500 $ 37,000 Cost of goods sold 590, 100 648,500 Accounts receivable, net 37,400 60,400 Interest expense 9,200 16,000 Merchandise inventory 84,240 134,500 Income tax expense 15,185 25,542 Prepaid expenses 5, 200 7,500 Net income 175,515 235, 158 Plant assets, net 290,000 310,400 Basic earnings per share 5.16 5.71 Total assets $437,340 $549,800 Cash dividends per share 3.78 3.96 | Liabilities and Equity Beginning-of-year balance sheet data Current liabilities $ 66,340 $ 92,300 Accounts receivable, net $ 25,800 $ 55,200 Long-term notes payable 79,800 111,000 Merchandise inventory 53,600 113,400 Common stock, $5 par value 170,000 206,000 Total assets 438,000 412,500 Retained earnings 121,200 140,500 Common stock, $5 par value 170,000 206,000 Total liabilities and equity $437,340 $549,800 Retained earnings 74,205 68,494 For both companies compute the current ratio. Current Ratio 1 Choose Denominator: 1 Current liabilities Company Choose Numerator: Current assets Barco Kyan = Current Ratio = Current ratio 0 to 1 0 to 1 / / = For both companies compute the acid-test ratio. Acid-Test Ratio (b) Company Cash Barco Kyan Choose Numerator: Short-term investments Choose Denominator: 1 Current liabilities Current receivables Il Acid-Test Ratio Acid-test ratio 0 to 1 0 to 1 II + / For both companies compute the accounts (including notes) receivable turnover. (c) Company Choose Numerator: Net sales Barco Kyan Accounts Receivable Turnover 1 Choose Denominator: Accounts Receivable Turnover Average accounts receivable, net = Accounts receivable turnover 0 times 0 times For both companies compute the inventory turnover. (d) Company Choose Numerator: Cost of goods sold Barco Kyan Inventory Turnover 1 Choose Denominator: 1 Average inventory 1 = Inventory Turnover = Inventory turnover o times = 0 times For both companies compute the days' sales in inventory. (e) Company Choose Numerator: Merchandise inventory Barco Kyan Days' Sales in Inventory 1 Choose Denominator: Days / Cost of goods sold x 365 = Days' Sales in Inventory = Days' sales in inventory 0 days 0 days / / For both companies compute the days' sales uncollected. (1) Company Choose Numerator: Current receivables, net Barco Kyan Days' Sales Uncollected 1 Choose Denominator: x Days - Days' Sales Uncollected Net sales x 365 Days' sales uncollected 1 o days 1 o days = = For both companies compute the profit margin ratio. (a) Company Choose Numerator: Net income Barco Kyan Profit Margin Ratio 1 Choose Denominator: 1 Net sales 1 = Profit margin ratio = Profit margin ratio 0 % 0 % / II For both companies compute the total asset turnover (b) Company Choose Numerator: Net sales Barco Total Asset Turnover 1 Choose Denominator: Average total assets 1 = Total Asset Turnover = Total asset turnover 0 times Kyan 1 = 0 times For both companies compute the return on total assets. (c) Company Choose Numerator: Net income Barco Kyan Return on Total Assets 1 Choose Denominator: / Average total assets / = Return on Total Assets = Return on total assets 0 % 0 % For both companies compute the return on common stockholders' equity. (d) Company Net income Return On Common Stockholders' Equity Choose Denominator Choose Numerator: Return On Common Stockholders' Equity Return On common stockholders' equity - Preferred dividends / Average common stockholders' equity Barco = 0 % Kyan 0 % Assuming that share and each company's stock can be purchased at $95 per share, compute their price-earnings ratios. (e) Company Choose Numerator: Market price per common share Barco Kyan Price-Earnings Ratio | Choose Denominator: 1 Earnings per share / Price-Earnings Ratio Price-earnings ratio 0 times / 0 times For both companies compute the days' sales uncollected. (1) Company Choose Numerator: Current receivables, net Barco Kyan Days' Sales Uncollected 1 Choose Denominator: x Days - Days' Sales Uncollected Net sales x 365 Days' sales uncollected 1 o days 1 o days = =
