of to stay in Protected View Enable Editing Summary information from the financial statements of two companies competing in the same industry is shown below: Barco Company Nyon Company Cascany Barco Company Data from the current year-end balance sheets Assets Cash $ 19,500 Accounts receivable, net............ 37,400 Current notes receivable (trade) ..... 9,100 Morchandise inventory. 84.440 Prepaid expenses.... 5.000 Plant assets, net.... 290.000 Total assets...... $445,440 $ 34,000 57,400 7,200 132,500 6.950 304,400 $542.450 Data from the current year's income statement Sales $770,000 Cost of goods sold 585,100 Interest expense. 7.900 Income tax expense..... 14.800 Net income... 162,200 Basic earnings per share... Cash dividonds per share. 281 $880.200 632.500 13,000 24.300 210,400 5.11 393 $ 29,800 $54.200 Liabilities and Equity Current liabitties.. Long-term 'notes payable....... Common stock. $5 par value... Retained earnings ........ Total abilities and equity..... $ 61,340 80.800 180.000 123 300 $445.440 $ 93,300 101,000 206,000 142,150 $542,450 Beginning-of-year balance sheet data Accounts receivable, net .. Current notes receivable (trade) ...... Merchandise inventory....... Total assets Common stock, $5 par value Retained earnings. 55,600 398,000 180.000 98,300 107,400 382.500 206.000 93.600 You are required to provide answers and/or solutions to the following: For both companios compute: 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. 2. Identify the company you consider to be the better short-term credit risk and explain why. Round to one decimal place. 3. For both companies compute: a. profit margin ratio, b. total asset turnover, C. return on total assets, and d. return on common stockholders' equity. 4. Identify which company's stock you would recommend as the better investment and explain why. D B Barco C Kyan Barco Kyan Data from the current year's Income Statement 2 Data from current year end Balance Sheet 3 Assets 5 Cash 5 Accounts Receivable, net Current Notes Receivable (trade) 3 Merchandise Inventory Prepaid Expense Plant Assets, net Total Assets 19,500 37,400 9,100 84,400 5,000 290,000 445,400 34,000 57,400 7,200 132,500 6,950 304,400 542,450 Sales Cost of Goods Sold (COGS) Interest Expense Income tax expense Net Income Basic earnings per share Cash dividends per share 770,000 585,100 7,900 14,800 162,200 880,200 632,500 13,000 24,300 210,400 5.11 4.51 3.93 Beginning-of-year Balance Sheet data Liabilities and Equity 29,800 54,200 Current liabilities Long-term notes payable Common Stock, $5 par value Retained Earnings Total liabilities and equity 61,340 80,800 180,000 123,300 445,440 93,300 101,000 206,000 142,150 542,450 Accounts Receivable, net Current Notes Receivable (trade) Merchandise Inventory Total Assets Common Stock, $5 par value Retained Earnings 55,600 398,000 180,000 98,300 107,400 382,500 206,000 93,600 1. Define Terms Current Ratio - 5 Current Assets 6 Current Liabilities 7 Ratio #DIVIO! #DIV/O! Acid Test - Barco Kyan T1 Cash Current Receivables Current Liabilities Ratio 14 #DIV/0! #DIV/O! Accounts Recievable Turnover Barco Kyan 18 Net Sales 19 Average Accounts Receivables 20 Ratio #DIVIO! #DIV/O! Inventory Turnover - Barco 23 24 Cost of Goods Sold (COGS) 25 Merchandise Inventory 26 Ratio #DIV/0! #DIV/0! Days' Sale in inventory - Barco Kyan 30 Ending Inventory Lost of Goods Sold (COGS) 2 Ratio #DIV/0! #DIV/0! Days Sales Uncollected - 6 Accounts Receivable.net Net Sales 3 Ratio #DIV/0! #DIV/O! LCDE 1 Define Terms Ptofit Margin- Barco Kyan 5 Net Income 6 Net Sales 7 Ratio #DIV/0! #DIV/0! Total Assest Turnover - Barco Kyan 10 11 Net Sales 12 Average Total Assets 13 Ratio #DIV/0! #DIV/0! 14 Return on Total Assests - 15 Barco 17 Net Income 18 Average Total Assets 19 Ratio #DIV/0! #DIV/0! 20 Return on Common Stockholder's Equity - Barco Kyan 23 Net Income 24 Aver Stockholder Equity 25 Ratio #DIV/0! #DIV/0! 2. Identify the company you consider to be the better short-term credit risk and explain why. 4. Identify which company's stock you would recommend as the better investment and explain why
