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Required information Skip to question [The following information applies to the questions displayed below.] Summary information from the financial statements of two companies competing in

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[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 Company Kyan Company Barco Company Kyan Company
Data from the current year-end balance sheets Data from the current years income statement
Assets Sales $ 760,000 $ 885,200
Cash $ 21,500 $ 37,000 Cost of goods sold 595,100 642,500
Accounts receivable, net 37,400 57,400 Interest expense 9,100 10,000
Merchandise inventory 84,740 140,500 Income tax expense 14,608 24,438
Prepaid expenses 5,600 6,950 Net income 141,192 208,262
Plant assets, net 310,000 308,400 Basic earnings per share 3.72 4.82
Total assets $ 459,240 $ 550,250 Cash dividends per share 3.81 4.01
Liabilities and Equity Beginning-of-year balance sheet data
Current liabilities $ 69,340 $ 104,300 Accounts receivable, net $ 30,800 $ 55,200
Long-term notes payable 79,800 115,000 Merchandise inventory 61,600 109,400
Common stock, $5 par value 190,000 216,000 Total assets 398,000 382,500
Retained earnings 120,100 114,950 Common stock, $5 par value 190,000 216,000
Total liabilities and equity $ 459,240 $ 550,250 Retained earnings 123,688 79,920

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.

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