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:

Balance Sheet ($000) Carson Electronics, Inc. BGT Electronics, Inc. Cash $1,980 $1,490 Accounts receivable 4,460 6,030 Inventories 1,510 2,530 Current assets $7,950 $10,050 Net fixed assets 16,000 24,990 Total assets $23,950 $35,040 Accounts payable $2,460 $5,050 Accrued expenses 990 1,490 Short-term notes payable 3,550 1,510 Current liabilities $7,000 $8,050 Long-term debt 7,950 3,950 Owners' equity 9,000 23,040 Total liabilities and owners' equity $23,950 $35,040

Income Statement ($000) Carson Electronics, Inc. BGT Electronics, Inc. Net sales (all credit) $47,960 $70,050 Cost of goods sold (35,970) (42,000) Gross profit $11,990 $28,050 Operating expenses (8,050) (12,010) Net operating income $3,940 $16,040 Interest expense (1,180) (540) Earnings before taxes $2,760 $15,500 Income taxes (35%) (966) (5,425) Net income $1,794 $10,075

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.