Carson Electronics' management has long viewed BGT Electronics as an industry leader and uses this firm as a model firm for analyzing its own performance. The balance sheets and income statements for the two firms are found here:

a.Calculate the following ratios for both Carson and BGT:

Current ratio Times interest earned Inventory turnover Total asset turnover Operating profit margin

Operating return on assets Debt ratio Average collection period Fixed asset turnover Return on equity

b.Analyze the differences you observe between the two firms. Comment on what you view as weaknesses in the performance of Carson as compared to BGT that Carson's management might focus on to improve its operations.

Carson Electronics, Inc. Balance Sheet ($000)			BGT Electronics, Inc. Balance Sheet ($000)
Cash		$2,020			$1,460
Accounts receivable		4,450			6,000
Inventories		1,490			2,470
Current assets		$7,960			$9,930
Net fixed assets		16,040			24,960
Total assets		$24,000			$34,890
Accounts payable		$2,550			$5,020
Accrued expenses		1,000			1,460
Short-term notes payable		3,460			1,510
Current liabilities		$7,010			$7,990
Long-term debt		8,000			3,980
Owners' equity		8,990			22 comma 92022,920
Total liabilities and owners' equity		$24,000			$34,890

	Carson Electronics, Inc. Income Statement ($000)			BGT Electronics, Inc. Income Statement ($000)
Net sales (all credit)		$47,970			$69,960
Cost of goods sold		(35,980)			(42,050)
Gross profit		$11,990			$27,910
Operating expenses		(7,980)			(12,010)
Net operating income		$4,010			$15,900
Interest expense		(1,130)			(520)
Earnings before taxes		$2,880			$15,380
Income taxes (35 %35%)		(1,008)			(5,383)
Net income		$1,872			$9,997

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