Barco Kyan Company Company Data from the current year-end balance sheets Assets Cash $ 22,000 $ 33,000 Accounts receivable, net 33,400 51,400 Merchandise inventory 84,740 132,500 Prepaid expenses 5,400 7,650 Plant assets, net 350,000 309,400 Total assets $495,540 $533,950 Barco Kyan Company Company Data from the current year's income statement Sales $800,000 $885,200 Cost of goods sold 587,100 632,500 Interest expense 7,800 12,000 Income tax expense 15, 377 24,438 Net income 189,723 216, 262 Basic earnings per share 4.52 4.78 Cash dividends per share 3.78 3.91 Liabilities and Equity Current liabilities Long-term notes payable Common stock, $5 par value Retained earnings Total liabilities and equity $ 62,340 $103,300 84,800 111,000 210,000 226,000 138,400 93,650 $495,540 $533,950 Beginning-of-year balance sheet data Accounts receivable, net Merchandise inventory Total assets Common stock, $5 par value Retained earnings $ 31,800 $ 54,200 63,600 111,400 388,000 422,500 210,000 226,000 107,437 54,120 Problem 13-5A Part 1 Required: 1a. For both companies compute the (a) current ratio, (b) acid-test ratio, (c) accounts receivable turnover, (d) inventory turnover, (e) days' sales in inventory, and ( days' sales uncollected. (Do not round intermediate calculations.) 1b. Identify the company you consider to be the better short-term credit risk. Complete this question by entering your answers in the tabs below. 1A Current Ratio 1A Acid Test Ratio 1A Acct Rec Turn 1A Invent Turnover 1A Days Sal in Inv 1A Days Sal Uncol 1B short term For both companies compute the current ratio. (a) Current Ratio Company Choose Numerator: 1 Choose Denominator: E Current Ratio Current ratio 1 Barco 1 = 0 to 1 to 1 Kyan 1 II O 1A Current Ratio 1A Acid Test Ratio 1A Acct Rec Turn 1A Invent Turnover 1A Days Sal in Iny 1A Days Sal Uncol 1B short term For both companies compute the acid-test ratio. (b) Acid-Test Ratio Company Choose Numerator: Choose Denominator: = Acid-Test Ratio Acid-test ratio + + / = Barco + + + / = to 1 0 o Kyan + + to 1 1A Current Ratio 1A Acid Test Ratio 1A Acct Rec Turn 1A Invent Turnover 1A Days Sal in Inv 1A Days Sal Uncol 1B short term For both companies compute the accounts (including notes) receivable turnover. (c) Accounts Receivable Turnover Company Choose Numerator: 1 Choose Denominator: = Accounts Receivable Turnover / = Accounts receivable turnover Barco 1 = 0 times Kyan 0 times 1A Current Ratio 1A Acid Test Ratio 1A Acct Rec Turn 1A Invent Turnover 1A Days Sal in Inv 1A Days Sal Uncol 1B short term For both companies compute the inventory turnover. (d) Inventory Turnover Company Choose Numerator: 1 Choose Denominator: Inventory Turnover / = Inventory turnover Barco = 0 times Kyan 1 = 0 0 times 1A Current Ratio 1A Acid Test Ratio 1A Acct Rec Turn 1A Invent Turnover 1A Days Sal in Inv 1A Days Sal Uncol 1B short term For both companies compute the days' sales in inventory. (e) Days' Sales in Inventory. Company Choose Numerator: / Choose Denominator: Days II Days' Sales in Inventory Days' sales in inventory 1 II = Barco 1 = 0 days Kyan 1 = II 0 days 1A Current Ratio 1A Acid Test Ratio 1A Acct Rec Turn 1A Invent Turnover 1A Days Sal in Inv 1A Days Sal Uncol 1B short term For both companies compute the days' sales uncollected. (f) Days' Sales Uncollected Company Choose Numerator: 1 Choose Denominator: Days = Days' Sales Uncollected / Days' sales uncollected Barco 1 0 days Kyan 1 = 0 days Identify the company you consider to be the better short-term credit risk. Better short-term credit risk 2A Prof Mar Ratio 2A Tot Asset Turn 2A Ret on Tot Assets 2A Ret On Com Stock 2A Price Earn Ratio 2A Div Yield Req 2B For both companies compute the profit margin ratio. (a) Company Choose Numerator: Profit Margin Ratio 1 Choose Denominator: = Profit margin ratio Profit margin ratio / = Barco / 0 % Kyan 1 II 0 % 2A Prof Mar 2A Tot Asset 2A Prof Mar Ratio Turn 2A Ret on Tot Assets 2A Ret On Com Stock 2A Price Earn Ratio 2A Div Yield Req 2B For both companies compute the total asset turnover Total Asset Turnover (b) Company Choose Numerator: 1 Choose Denominator: = Total Asset Turnover / = Total asset turnover Barco / 11 0 times Kyan 1 = o times 2A Prof Mar Ratio 2A Tot Asset Turn 2A Ret on Tot Assets 2A Ret On Com Stock 2A Price Earn Ratio 2A Div Yield Req 2B For both companies compute the return on total assets. (c) Return on Total Assets Company Choose Numerator: 1 Choose Denominator: = Return on Total Assets 1 = Return on total assets III Barco 1 0 % Kyan 7 = 0 % 2A Prof Mar Ratio 2A Tot Asset Turn 2A Ret on Tot Assets 2A Ret On Com Stock 2A Price Earn Ratio 2A Div Yield Req 2B For both companies compute the return on common stockholders' equity. Return On Common Stockholders' Equity / Choose Denominator Company Choose Numerator: = Return On Common Stockholders' Equity Return On common stockholders' equity 1 Barco 1 = 0 % II 11 Kyan 1 0 % 2A Prof Mar Ratio 2A Tot Asset Turn 2A Ret on Tot Assets 2A Ret On Com Stock 2A Price Earn Ratio 2A Div Yield Req 2B Assuming that share and each company's stock can be purchased at $100 per share, compute their price-earning (e) Price-Earnings Ratio Company Choose Numerator: 1 Choose Denominator: / = Price-Earnings Ratio = Price-earnings ratio 0 times Barco / = Kyan 1 = 0 times 2A Prof Mar Ratio 2A Tot Asset Turn 2A Ret on Tot Assets 2A Ret On Com Stock 2A Price Earn Ratio 2A Div Yield Req 2B Assuming that each company's stock can be purchased at $100 per share, compute their dividend yields. (f) Dividend Yield Company Choose Numerator: 1 Choose Denominator: = Dividend Yield / = Dividend yield Barco 1 0 % II II Kyan / 0 % . Identify which company's stock you would recommend as the better investment. The better investment