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.

Required information [The following information applies to the questions displayed below.) Summary information from the financial statements of two companies competing in the same industry follows. Kyan Company Barco Company Data from the current year-end balance sheets Assets Cash 18,000 $ Accounts receivable, net 35,400 Current notes receivable (trade) 9,500 Merchandise inventory 84,340 Prepaid expenses 5,800 Plant assets, net 310,000 Total assets $ 463, 040 $ 34,000 55,400 8,200 140,500 7,000 310,400 555,500 $ Liabilities and Equity Current liabilities Long-term notes payable Common stock, $5 par value Retained earnings Total liabilities and equity 70,340 $ 81,800 170,000 140,900 463, 040 $ 95,300 103,000 246,000 111,200 555,500 $ Data from the current year's income statement Sales $ 770,000 $ Cost of goods sold 588,100 Interest expense 8,300 Income tax expense 14,800 Net income 158,800 Basic earnings per share 4.67 Cash dividends per share 3.73 886,200 640,500 14,000 24,465 207, 235 4.21 4.02 $ 53,200 Beginning-of-year balance sheet data Accounts receivable, net Current notes receivable (trade) Merchandise inventory Total assets Common stock, $5 par value Retained earnings 25,800 $ 0 61,600 378,000 170,000 108,920 117,400 392,500 246,000 101,749 1A Current Ratio 1A Acid Test Ratio 1A Acct Rec Turn 1A Invent Turnover 1A Days Sal in Inv 1A Days Sal Uncol Req 1B For both companies compute the acid-test ratio. (b) Acid Test Ratio Company Choose Numerator: Choose Denominator: Acid-Test Ratio + + Acid-test ratio Barco oto 1 + + Kyan + + 0 to 1 1A Current Ratio 1A Acid Test Ratio 1A Acct Rec Turn 1A Invent Turnover 1A Days Sal in Inv 1A Days Sal Uncol Req 1B For both companies compute the accounts (including notes) receivable turnover. (c) Accounts Receivable Turnover 1 Choose Denominator: = Accounts Receivable Turnover Choose Company Numerator: Accounts receivable turnover Barco 0 times Kyan 0 times 1A Current Ratio 1A Acid Test Ratio 1A Acct Rec Turn 1A Invent Turnover 1A Days Sal in Inv 1A Days Sal Uncol Req 1B For both companies compute the inventory turnover. (d) Inventory Turnover 1 Choose Denominator: Company Choose Numerator: Inventory Turnover Inventory turnover 0 times Barco Kyan 0 times 1A Current Ratio 1A Acid Test Ratio 1A Acct Rec Turn 1A Invent Turnover 1A Days Sal in Inv 1A Days Sal Uncol Req 1B For both companies compute the days' sales in inventory. (e) Days' Sales in Inventory 1 Choose Denominator: Company Choose Numerator: x Days = Days' Sales in Inventory Days' sales in inventory Barco 0 days 0 days Kyan 1A Current Ratio 1A Acid Test Ratio 1A Acct Rec Turn 1A Invent Turnover 1A Days Sal in Inv 1A Days Sal Uncol Req 1B For both companies compute the days' sales uncollected. (f) Days' Sales Uncollected I Choose Denominator: CompanyChoose Numerator: ~ Days = Days' Sales Uncollected Days' sales uncollected 0 days 0 days Barco Kyan II 1A Current Ratio 1A Acid Test Ratio 1A Acct Rec Turn 1A Invent Turnover 1A Days Sal in Inv 1A Days Sal Uncol Req 1B Identify the company you consider to be the better short-term credit risk. Better short-term credit risk