Required information 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 Kyan Barco Kyan Company Company Company Company Data from the current year-end balance sheets Data from the current year's income statement Assets Sales $810,000 $891,200 Cash $ 18,500 $ 34,000 Cost of goods sold 587,100 638,500 Accounts receivable, net 38, 400 58, 400 Interest expense 9,000 13,000 Current notes receivable (trade) 10,100 8,400 Income tax expense 15,569 24,603 Merchandise inventory 84,440 130,500 Net income 198,331 215,097 Prepaid expenses 5,100 7,150 Basic earnings per share 5.22 4.56 Plant assets, net 340,000 306,400 Cash dividends per share 3.77 3.97 Total assets $496,540 $544,850 Beginning-of-year balance sheet data Liabilities and Equity Accounts receivable, net $ 28,800 $ 57,200 Current liabilities $ 61,340 $104,300 Current notes receivable (trade) Long-term notes payable 85,800 113,000 Merchandise inventory 65,600 115, 400 Common stock, $5 par value 190,000 236,000 Total assets 398,000 382,500 Retained earnings 159,400 91,550 Common stock, $5 par value 190,000 236,boo Total liabilities and equity $496,540 $544,850 Retained earnings 104, 329 63,837 1A Current Ratio 1A Acid Test Ratio 1A Acct Rec Turn 1A Invent Turnover 1A Days Sal in Inv 1A Days Sal Uncol Reg 1B For both companies compute the current ratio. (a) Current Ratio Choose Denominator: Company = Choose . Numerator: Current assets Current Ratio Current ratio 1 Current liabilities = Barco 61,340 = Kyan 104,300 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 Denominator: = Choose Numerator: Short-term investments Acid-Test Ratio Acid-test ratio Cash + Current + Current liabilities Barco + 61,340 18,500 34,000 Kyan $ + 104,300 1A Current Ratio 1A Acid Test Ratio 1A Acct Rec Turn 1A Invent Turnover 1A Days Sal in Inv 1A Days Sal Uncol Reg 1B For both companies compute the accounts (including notes) receivable turnover. (c) Company Choose Numerator: Net sales Accounts Receivable Turnover Choose Denominator: Average accounts receivable, net Accounts Receivable Turnover Accounts receivable turnover 1 Barcos Kyan 810,000 891,200 times times $ 0 1A Current Ratio 1A Acid Test Ratio 1A Acct Rec Turn 1A Invent Turnover 1A Days Sal in Inv 1A Days Sal Uncol Reg 1B For both companies compute the inventory turnover. (d) Inventory Turnover Company Choose Denominator: = Choose Numerator: Cost of goods sold 587,100 $ 638,500 i Average inventory = Inventory Turnover Inventory turnover 0 times 0 times Barco Kyan 1A Current Ratio 1A Acid Test Ratio 1A Acct Rec Turn 1A Invent Turnover 1A Days Sal in Inv 1A Days Sal Uncol Reg 1B For both companies compute the days' sales uncollected. Company I Choose Numerator: Current receivables, 5. net Days' Sales Uncollected Choose Denominator: x Net sales 810,000 x $ 891,200 x Days 365 = Days' Sales Uncollected Days' sales uncollected days Barco Kyan 1 days 1A Days Sal in Inv Reg 1B > Complete this question by entering your answers in the tabs below. 1A Current Ratio 1A Acid Test Ratio 1A Acct Rec Turn 1A Invent Turnover 1A Days Sal in Inv 1A Days Sal Uncol Reg 1B Identify the company you consider to be the better short-term credit risk. Better short-term credit risk 1A Days Sal Uncol Reg 1B >
