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. 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 Cash $ 19,500 $ 34,000 Cost of goods sold 585,100 632,900 Accounts receivable, 46,500 64,600 Interest expense net 7,900 13,000 Merchandise inventory 84,440 132,500 Income tax expense 14,800 24,00 Prepaid expenses 5,000 6,950 Net income 162,200 210,400 Plant assets, net 290,000 304,400 Basic earnings per 4.51 5.11 share Total assets $445,440 $542,450 Cash dividends per 3.81 3.93 share Liabilities and Equity Beginning-of-year balance sheet data Current liabilities $ 61,340 $ 93,360 Accounts receivable, $ 29,800 $ 54,100 Long-term notes payable 80,800 101,600 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 $445, 440 $542,450 Retained earnings equity 98,300 93, ce 1 Problem 13-5A Part 1 Required: 1a. For both companies compute the (a) current ratio, (b) acid-test ratio, ( 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) Current Ratio Choose Choose Company Numerator: Current Ratio Denominator: Current ratio Barco 1 to 1 Kyan to 1 1A Current Ratio 1A Acid Test Ratio > 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 acid-test ratio. (b) Acid-Test Ratio Company Choose Numerator: Choose Denominator: + 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) Accounts Receivable Turnover Choose 1 Choose Denominator: Company Accounts Receivable Numerator: Turnover 1 Accounts receivable turnover Barco times Kyan times = 1A 1A Acid 1A Acct 1A Invent 1A Days 1A Days 18 short Current Test Ratio Rec Turn Turnover Sal in Inv Sal Uncol term For both companies compute the inventory turnover. (d) Inventory Turnover Choose Choose Company Inventory Numerator: Denominator: Turnover 1 = Inventory turnover Barco times Kyan 1 times = 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 Numerator: Days' Sales in Denominator: x Days = Inventory Days' sales in X inventory Barco / days Kyan days = X = 1A 1A Acid 1A Acct 1A Invent 1A Days 1A Days 18 short Current Test Ratio Rec Turn Turnover Sal in Inv Sal Uncol term For both companies compute the days' sales uncollected. (0) Days' Sales Uncollected Choose Denominator: x Days = Choose Numerator: Company Days' Sales Uncollected Days' sales uncollected days Barco Kyan 1 / days 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