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	$1,520
Accounts receivable	4450	5970
Inventories	1530	2550
Current assets	$8,030	$10,040
Net fixed assets	15960	25020
Total assets	$23,990	$35,060
Accounts payable	$2,470	$5,000
Accrued expenses	980	1510
Short-term notes payable	3540	1550
Current liabilities	$6,990	$8,060
Long-term debt	7980	3960
Owners' equity	9020	23040
Total liabilities and owners' equity	$23,990	$35,060

Income Statement ($000)	Carson Electronics, Inc.	BGT Electronics, Inc.
Net sales (all credit)	$48,040	$70,000
Cost of goods sold	(36,030)	(42,000)
Gross profit	$12,010	$28,000
Operating expenses	(8,020)	(12,050)
Net operating income	$3,990	$15,950
Interest expense	(1,180)	(570)
Earnings before taxes	$2,810	$15,380
Income taxes (40%)	(1,124)	(6,152)
Net income	$1,686	$9,228