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Summary information from the financial statements of two companies competing in the same industry follows.

	Barco Company	Kyan Company		Barco Company	Kyan Company
Data from the current year-end balance sheets			Data from the current years income statement
Assets			Sales	$ 790,000	$ 896,200
Cash	$ 21,000	$ 37,000	Cost of goods sold	585,100	642,500
Accounts receivable, net	36,400	57,400	Interest expense	8,400	19,000
Merchandise inventory	84,440	130,500	Income tax expense	15,185	24,741
Prepaid expenses	6,100	7,300	Net income	181,315	209,959
Plant assets, net	360,000	306,400	Basic earnings per share	4.77	4.86
Total assets	$ 507,940	$ 538,600	Cash dividends per share	3.77	3.93
Liabilities and Equity			Beginning-of-year balance sheet data
Current liabilities	$ 67,340	$ 95,300	Accounts receivable, net	$ 26,800	$ 57,200
Long-term notes payable	83,800	107,000	Merchandise inventory	59,600	115,400
Common stock, $5 par value	190,000	216,000	Total assets	448,000	372,500
Retained earnings	166,800	120,300	Common stock, $5 par value	190,000	216,000
Total liabilities and equity	$ 507,940	$ 538,600	Retained earnings	128,745	80,117

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 (f) days sales uncollected.

Note: 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 Current Ratio
• 1A Acid Test Ratio
• 1A Acct Rec Turn
• 1A Invent Turnover
• 1A Days Sal in Inv
• 1A Days Sal Uncol
• 1B short term

For both companies compute the current ratio.

(a)	Current Ratio
Company	Numerator:	/	Denominator:	=	Current Ratio
	Current assets	/	Net sales	=	Current ratio
Barco	$507,940	/	$61,340	=	8.3	to 1
Kyan	$538,600	/		=	0	to 1