Problem 13-5A (Static) Comparative ratio analysis LO P3

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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	$ 770,000	$ 880,200
Cash	$ 19,500	$ 34,000	Cost of goods sold	585,100	632,500
Accounts receivable, net	46,500	64,600	Interest expense	7,900	13,000
Merchandise inventory	84,440	132,500	Income tax expense	14,800	24,300
Prepaid expenses	5,000	6,950	Net income	162,200	210,400
Plant assets, net	290,000	304,400	Basic earnings per share	4.51	5.11
Total assets	$ 445,440	$ 542,450	Cash dividends per share	3.81	3.93
Liabilities and Equity			Beginning-of-year balance sheet data
Current liabilities	$ 61,340	$ 93,300	Accounts receivable, net	$ 29,800	$ 54,200
Long-term notes payable	80,800	101,000	Merchandise inventory	55,600	107,400
Common stock, $5 par value	180,000	206,000	Total assets	398,000	382,500
Retained earnings	123,300	142,150	Common stock, $5 par value	180,000	206,000
Total liabilities and equity	$ 445,440	$ 542,450	Retained earnings	98,300	93,600

Problem 13-5A (Static) Part 1

Required:

1a. For both companies compute the (a) current ratio, (b) acid-test ratio, (c) accounts receivable turnover, (d) inventory turnover, (e) days' sales in inventory, and (f) days' sales uncollected.

Note: Do not round intermediate calculations.

1b. Identify the company you consider to be the better short-term credit risk.