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.

Balance Sheet ($000)	Carson Electronics, Inc.	BGT Electronics, Inc.
Cash	$2,050	$1,550
Accounts receivable	4520	5960
Inventories	1490	2460
Current assets	$8,060	$9,970
Net fixed assets	16030	25010
Total assets	$24,090	$34,980
Accounts payable	$2,450	$5,000
Accrued expenses	1020	1470
Short-term notes payable	3550	1520
Current liabilities	$7,020	$7,990
Long-term debt	8030	4000
Owners' equity	9040	22990
Total liabilities and owners' equity	$24,090	$34,980

Income Statement ($000)	Carson Electronics, Inc.	BGT Electronics, Inc.
Net sales (all credit)	$48,020	$69,960
Cost of goods sold	(36,000)	(42,000)
Gross profit	$12,020	$27,960
Operating expenses	(7,980)	(11,990)
Net operating income	$4,040	$15,970
Interest expense	(1,130)	(590)
Earnings before taxes	$2,910	$15,380
Income taxes (35%)	(1,019)	(5,383)
Net income	$1,891	$9,997