(Financial statement analysis)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:

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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

$1,960

$1,480

Accounts receivable

4520

6010

Inventories

1550

2530

Current assets

$8,030

$10,020

Net fixed assets

15990

25030

Total assets

$24,020

$35,050

Accounts payable

$2,520

$5,040

Accrued expenses

1040

1470

Short-term notes payable

3490

1490

Current liabilities

$7,050

$8,000

Long-term debt

7990

3950

Owners' equity

8980

23100

Total liabilities and owners' equity

Income Statement ($000)	Carson Electronics, Inc.	BGT Electronics, Inc.
Net sales (all credit)	$47,990	$69,990
Cost of goods sold	(35,950)	(41,990)
Gross profit	$12,040	$28,000
Operating expenses	(8,050)	(11,960)
Net operating income	$3,990	$16,040
Interest expense	(1,100)	(510)
Earnings before taxes	$2,890	$15,530
Income taxes (40%)	(1,156)	(6,212)
Net income	$1,734	$9,318

$24,020

$35,050