Required information Problem 13-5A Comparative ratio analysis LO 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. Cash Barco Kyan Barco Kyan Company Company Company Company Data from the current year-end balance Data from the current year's income sheets statement Assets Sales $770,000 $880,200 $ 19,500 $ 34,000 Cost of goods sold 585,100 632,500 Accounts receivable, 46,500 net 64,600 Interest expense 7,900 13,000 Merchandise inventory 84,440 132,500 Income tax expense 14,800 24,500 Prepaid expenses 5,000 6,950 Net income 162,200 210,400 Plant assets, net 290,000 304,400 Basic earnings per 4.51 11 share Total assets $445, 440 $542,450 Cash dividends per 3.81 share 3.93 Liabilities and Equity Beginning-of-year balance sheet data Current liabilities $ 61,340 $ 93,300 Accounts receivable, $ 29,800 $ 54,400 net Long-term notes payable 80,800 101,000 Merchandise inventory 55,600 107,400 Common stock, $5 par 180,000 206,000 Total assets value Retained earnings 123,300 142, 150 Common stock, $5 par value 180,000 206,000 Total liabilities and $445,440 $542,450 Retained earnings equity 98,300 398,000 382,500 93,400 Problem 13-5A 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 (1) days' sales uncollected. (Do not round intermediate calculations.) 1b. Identify the company you consider to be the better short-term credit risk. Complete this question by entering your answers in the tabs below. 1A 1A Acid 1A Acct 1A Invent 1A Days 1A Days 1B short Current Test Ratio Rec Turn Turnover Sal in Inv Sal Uncol term For both companies compute the current ratio. (a) Curren Choose Denominator: Choose Numerator: Company Current Ratio = 7 1 Barco Kyan Current ratio to 1 to 1 1A Current Ratio 1A Acid Test Ratio > 1A 1A Acid 1A Acct 1A Invent 1A Days 1A Days Current Test Ratio Rec Turn Turnover Sal in Inv Sal Uncol For both companies compute the acid-test ratio. 1B short term (b) Acid-Test Ratio Company Choose Numerator: Choose Denominator: + + 1 Acid-Test Ratio Acid-test ratio to 1 to 1 + + = Barco Kyan + + / 1A 1A Acid 1A Acct 1A Invent 1A Days 1A Days 1B short Current Test Ratio Rec Turn Turnover Sal in Inv Sal Uncol term For both companies compute the accounts (including notes) receivable turnover. (c) Company Choose Numerator: Accounts Receivable Turnover Accounts Receivable Choose Denominator: Turnover Accounts receivable turnover times times / 1 Barco Kyan IIII 1 1A 1A Acid 1A Acct 1A Invent 1A Days 1A Days 1B short Current Test Ratio Rec Turn Turnover Sal in Inv Sal Uncol term For both companies compute the inventory turnover. (d) Company Choose Numerator: 1 Inventory Turnover Choose Denominator: = Inventory Turnover Inventory turnover times times 1 1 1 Barco Kyan = Il 1A 1A Acid 1A Acct 1A Invent 1A Days 1A Days 1B short Current Test Ratio Rec Turn Turnover Sal in Inv Sal Uncol term For both companies compute the days' sales in inventory. (e) Days' Sales in Inventory Choose Choose Company Days' Sales in 1 Numerator: Denominator: x Days = Inventory Days' sales in inventory Barco 1 days Kyan X days 1 X XX 1 1A 1A Acid 1A Acct 1A Invent 1A Days 1A Days 1B short Current Test Ratio Rec Turn Turnover Sal in Inv Sal Uncol term For both companies compute the days' sales uncollected. (f) Days' Sales Uncollected Company Choose Choose Numerator: x Days = Days' Sales Denominator: Uncollected Days' sales uncollected Barco days Kyan X days II x 1 1 XIX II 11 1A 1A Acid 1A Acct 1A Invent 1A Days 1A Days 1B short Current Test Ratio Rec Turn Turnover Sal in Inv Sal Uncol term Identify the company you consider to be the better short-term credit risk. Better short-term credit risk