Problem 13-5A Comparative ratio analysis LO A1, P3 The following information applies to the questions displayed below.] Summary information from the financial statements of two companies competing in the same industry follows Barco CompanyCompany Kyan Kyan Company Company Data from the current year-end balance sheets Assets Cash Accounts receivable, net Current notes receivable (trade) Merchandise inven Prepaid expenses Plant assets, net Total assets Data from the current year's income statement Sales $790,000 $909,200 592,100 636,500 8,200 12,000 15,185 25,100 174,515 235,600 72 3.91 22,000 $ 33,000 Cost of goods sold 39,400 54,400 Interest expense 9,500 7,200 Income tax expense tory 84,640 140,500 Net income 4.59 3.80 5,200 7,450 Basic earnings per share 330,000 310,400 Cash dividends per share $490,740 $552,950 Beginning-of-year balance sheet data Accounts receivable, net $ 28,800 53,200 Liabilities and Equity Current liabilities Long-term notes payable Common stock, $5 par value Retained earnings Total liabilities and equity $ 67,340 91,300 Current notes receivable (trade) 82,800 107,000 Merchandise inventory 190,000 206,000 Total assets 150,600 148,650 Common stock, S5 par value 57,600 107400 448,000 362,500 190,000 206 000 120,485 74,142 $490,740 $552,950 Retained earnings 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 (days' sales uncollected. (Do not round intermediate calculations.) 1b. Identify the company you consider to be better short-term credit risk. Complete this question by entering your answers in the tabs below 1A Current A Acid Test1A Acct Rec 1A Invent 1A Days Sal in 1A Days Sal Req 1B Ratio Ratio Turn Turnover Inv Uncol For both companies compute the current ratio. Company Choose Numerator: Choose Denominator: Current Ratio Current ratio 0 to 1 0 to 1 Barco Kyan 1A Current Ratio A Acid Test Ratio 2a. For both companies compute the (a) profit margin ratio, (b) total asset turnover, ( return on total assets, and (d) return on common stockholders' equity. Assuming that share and each company's stock can be purchased at $75 per share, compute their (e) price- earnings ratios and ( dividend yields. (Do not round intermediate calculations. Round your answers to 2 decimal places 2b. Identify which company's stock you would recommend as the better investment. Complete this question by entering your answers in the tabs below 2A Ret On Asset 2A Ret on Tot Com Stock 2A Price Earm 2A Pro Marg Ratio 2A Tot 2A Div Yield Req 2B Turn Assets Ratio Equity For both companies compute the profit margin ratio. Profit Margin Ratio CompanyChoose Numerator: Choose Denominator: Profit margin ratio Profit margin ratio Barco 01% 01%) Kyan 2A Pro Marg Ratio 2A Tot Asset Turn>
