hapter 13 Analysis of Financial Statements equired . For both companies compute the (a) current ratio, (b) acid-test ratio, (c) accounts (including notes) receiv- able turnover, (d) inventory turnover, (e) days' sales in inventory, and () days' sales uncollected. Identify the company you consider to be the better short-term credit risk and explain why. Round to one decimal place. 2. For both companies compute the (a) profit margin ratio, (b) total asset turnover, (c) return on total assets, and (d) return on common stockholders' equity. Assuming that each company's stock can be purchased at $75 per share, compute their (e) price-earnings ratios and) dividend yields. Round to one decimal place. Identify which company's stock you would recommend as the better investment and explain why Summary information from the financial statements of two companies competing in the same industry follows Problem Comparat A1 P3 rco Kyan Barco Company Company Kyan Company Company Data from the current year-end balance sheets Data from the current year's income statement Sales Cash Accounts receivable, net Current notes receivable (trade) Merchandise inventory.. $770,000 $880,200 585,100 632,500 7,900 13,000 14,800 24,300 162,200 210,400 5.11 3,93 s 19,500 34,000 Cost of goods sold 37,400 57,400 Interest expense 9.100 84,440 132,500 Net income. 7.200 Income tax expense... 5,000 290,000 304.400 Cash dividends per share. 445,440 $542.450 6.950 Basic earnings per share Plant assets, net.... Total assets 4.51 3.81 Beginning-of-year balance sheet data Accounts receivable, net Liabilities and Equity Current labilities Long-term notes payable 29,800 54,200 $61,340 $ 93,300 Current notes receivable (trade) 80,800 101,000 Merchandise inventory... 80000 206.000ass 23.300 55,600 107,400 398,000 382,500 80,000206.000 Retained carnings 142,150 Common stock, $5 par value Total liabilities and equity,--." $445440 4 earnings- 2.450 Retained 98,300 93,600