"Problem 17-5A 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 yan ompany ompany Data from the current year-end balance sheets Assets Cash 18,08es 48,480 9,400 84,640 6,000 33,eee 58,48e 7,480 Accounts receivable, net Current notes receivable (trade) Merchandise inventory Prepaid expenses Plant assets, net 136,500 7,850 309,480 288.080 438,440 552,550 Total assets Liabilities and Equit Current liabilities 62,340s 96, 380 Long-term notes payable 79,88e 105,080 Common stock, $5 par value Retained earnings 236,08e 210,08e 86.380 115,25e 438,440s Total liabilities and equity 552,550 Data from the current year's income statement Sales 788,08es 903,200 Cost of goods sold Interest expense Income tax expense 590, 18e 648,58e 8,300 16,08 14,992 166.608 24,935 Net income 213,765 Basic earnings per share Cash dividends per share 3.97 4.53 3.76 3.99 Beginning-of- year balance sheet data Accounts receivable, net Current notes receivable (trade) Merchandise inventory Total assets 27,880s 53,200 59,600 109,400 402,580 236,080 89813 418,000 Common stock, $5 par value Retainedeacnings. 210,e0e 77.612 Problem 17-5 Part 1 Required: 1a. For both companies compute the (a) current ratio. (b) acid-test ratio. (c) accounts (including notes) receivable tumover, (c) inventory tunover. (e) days sales in inventory, and ( days sales uncollected. (Do not round Intermedlate 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 Days Sal Uncol 1A Acid Test 1A Days Sal in 1A Current 1A Acct Rec 1A Invent Req 1B Ratio Ratio Turn Turnover Iny For both companies compute the current ratio. (a) Current Ratio IChoose Denominator: Company Choose Numerator: Current Ratio Current ratio = to 1 Barco = to 1 yan 1A Current Ratio 1A Acid Test Ratio 1A Days Sal Uncol 1A Days Sal in 1A Acid Test 1A Invent 1A Current 1A Acct Rec Req 1B Ratio Ratio Turn Turnover Inv For both companies compute the acid-test ratio. (b) Acid Test Ratio Company Choose Numerator: = Acid-Test Ratio Choose Denominator: Acid-test ratio 0 to 1 Barco 0 to 1 yan + 1A Current Ratio 1A Acct Rec Turn + 1A Days Sal Uncol 1A Acid Test 1A Days Sal in 1A Current 1A Acct Rec 1A Invent Req 1B Ratio Ratio Turn Turnover Inv For both companies compute the accounts (including notes) receivable turnover. (c) Accounts Receivable Turnover Choose Company Numerator: =Accounts Receivable Turnover Choose Denominator: Accounts receivable turnover 0 times Barco 0 times yan > 1A Acid Test Ratio 1A Invent Turnover 1A Acid Test 1A Invent Turnover 1A Days Sal in 1A Days Sal Uncol 1A Current 1A Acct Rec Req 1B Ratio Ratio Turn Inv For both companies compute the inventory turnover. (d) Inventory Turnover Choose Denominator: Company Choose Numerator: Inventory Turnover Inventory turnover 0 times Barco oltimes yan 1A Acct Rec Turn 1A Days Sal in Inv 1A Days Sal Uncol 1A Days Sal in 1A Acid Test 1A Current Ratio 1A Acct Rec 1A Invent Req 1B Ratio Turn Turnover Inv For both companies compute the days' sales in inventory. (e) Days' Sales in Inventory Choose Denominator: Days' Sales in Inventory Company Choose Numerator: Days Days sales in inventory 0 days Barco 0 days yan Problem 17-5 Part 2 2a. For both companies compute the (a) profit margin ratio, (b) total asset turnover, (c) return on total assets, and (c) return on common stockholders equity. Assuming that share and each company's stock can be purchased at $105 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 2A Pro Marg 2A Tot Asset 2A Ret on Tot 2A Price Earn 2A Div Yield Com Stock Equity Req 2B Ratio Turn Assets Ratio For both companies compute the profit margin ratio. (a) Profit Margin Ratio Company Choose Numerator Choose Denominator: Profit margin ratio Profit margin ratio Barco % yan 96 2A Pro Marg Ratio 2A Tot Asset Turn 2A Ret On 2A Pro Marg 2A Tot Asset 2A Ret on Tot 2A Price Ean Com Stock 2A Div Yield Req 2B Ratio Turn Assets Ratio Equity For both companies compute the total asset turnover (b) Total Asset Turnover Total Asset Choose Denominator: Company Choose Numerator: Turnover Total asset turnover 0 times Barco 0ltimes an 2A Pro Marg Ratio > 2A Ret on Tot Assets | 2A Ret On 2A Pro Marg 2A Price Earn 2A Tot Asset 2A Ret on Tot 2A Div Vield Com Stock Equity Req 2B Ratio Turn Assets Ratio For both companies compute the return on common stockholders' equity. (d) Return on Common Stockholders' Equity Return On Common Stockholders' Equity Company Choose Numerator: Choose Denominator Return On common stockholders' equity 0% Barco 0% yan > 2A Ret on Tot Assets 2A Price Eam Ratio Complete this question by entering your answers in the tabs below. 2A Ret On 2A Pro Marg 2A Tot Asset 2A Ret on Tot 2A Price Earn Com Stock 2A Div Yield Req 2B Ratio Turn Assets Ratio Equity Assuming that share and each company's stock can be purchased at $105 per share, compute their price-earnings ratios. (e) Price-Earnings Ratio Choose Denominator: Company Choose Numerator: Price-Earnings Ratio Price-earnings ratio 0 times Barco 0 times yan 2A Ret On Com Stock quity 2A Pro Marg 2A Tot Asset 2A Ret on Tot 2A Price Ear 2A Div Yield Req 2B Ratio Turn Assets Ratio Assuming that share and each company's stock can be purchased at $75 per share, compute their dividend yields. (f) Dividend Yield Company Choose Denominator: Choose Numerator: Dividend Yield Dividend yield 0 % Barco 0 % yan