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How to solve this? Summary information from the financial statements of two companies competing in the same industry follows. Barco Company Kyan Company Barco Company

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Summary information from the financial statements of two companies competing in the same industry follows.

Barco Company Kyan Company Barco Company Kyan Company
Data from the current year-end balance sheets Data from the current years income statement
Assets Sales $ 790,000 $ 927,200
Cash $ 18,500 $ 37,000 Cost of goods sold 588,100 642,500
Accounts receivable, net 36,400 59,400 Interest expense 8,200 16,000
Current notes receivable (trade) 10,000 7,800 Income tax expense 15,185 25,597
Merchandise inventory 84,340 140,500 Net income 178,515 243,103
Prepaid expenses 5,900 7,700 Basic earnings per share 4.70 5.15
Plant assets, net 340,000 312,400 Cash dividends per share 3.77 4.02
Total assets $ 495,140 $ 564,800
Beginning-of-year balance sheet data
Liabilities and Equity Accounts receivable, net $ 28,800 $ 57,200
Current liabilities $ 67,340 $ 97,300 Current notes receivable (trade) 0 0
Long-term notes payable 80,800 113,000 Merchandise inventory 59,600 115,400
Common stock, $5 par value 190,000 236,000 Total assets 388,000 392,500
Retained earnings 157,000 118,500 Common stock, $5 par value 190,000 236,000
Total liabilities and equity $ 495,140 $ 564,800 Retained earnings 121,745 65,141

Required: 1a. For both companies compute the (a) current ratio, (b) acid-test ratio, (c) accounts (including notes) receivable turnover, (d) inventory turnover, (e) days sales in inventory, and (f) days sales uncollected. (Do not round intermediate calculations.) 1b. Identify the company you consider to be better short-term credit risk.

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