CarsonElectronics' 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 foundhere: SEE BELOW FOR DATA TABLE

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a.Calculate the following ratios for both Carson andBGT:

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 thatCarson's management might focus on to improve its operations.

DATA TABLE:

CarsonElectronics, Inc.

Balance Sheet($000)

Cash

$1,980

Accounts receivable

4,510

Inventories

1,540

Current assets

$8,030

Net fixed assets

16,010

Total assets

$24,040

Accounts payable

$2,550

Accrued expenses

970

Short-term notes payable

3,500

Current liabilities

$7,020

Long-term debt

7,970

Owners' equity

9,050

Total liabilities andowners' equity

$24,040

BGTElectronics, Inc.

Balance Sheet($000)

Cash

$1,530

Accounts receivable

6,020

Inventories

2,450

Current assets

$10,000

Net fixed assets

24,960

Total assets

$34,960

Accounts payable

$5,020

Accrued expenses

1,460

Short-term notes payable

1,470

Current liabilities

$7,950

Long-term debt

3,970

Owners' equity

23,040

Total liabilities andowners' equity

$34,960

CarsonElectronics, Inc.

Income Statement($000)

Net sales(all credit)

$48,050

Cost of goods sold

(36,040)

Gross profit

$12,010

Operating expenses

(8,030)

Net operating income

$3,980

Interest expense

(1,190)

Earnings before taxes

$2,790

Income taxes (35%)

(977)

Net income

$1,813

BGTElectronics, Inc.

Income Statement($000)

Net sales(all credit)

$70,040

Cost of goods sold

(41,980)

Gross profit

$28,060

Operating expenses

(12,050)

Net operating income

$16,010

Interest expense

(590)

Earnings before taxes

$15,420

Income taxes (35%)

(5,397)

Net income

$10,023