! Required information (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 $ 22,000 37,400 84,740 5,300 350,000 $ 499,440 Data from the current year-end balance sheets Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets Liabilities and Equity Current liabilities Long-term notes payable Common stock, $5 par value Retained earnings Total liabilities and equity $ 770,000 584,100 9,100 14,800 162,000 4.76 $ 36,000 59,400 130,500 6,950 311,400 $ 544,250 $ 910, 200 632,500 15,000 25, 128 237,572 5.77 Data from the current year's income statement Sales Cost of goods sold Interest expense Income tax expense Net income Basic earnings per share Cash dividends per share Beginning-of-year balance sheet data Accounts receivable, net Merchandise inventory Total assets Common stock, $5 par value Retained earnings 3.82 3.99 $ 60, 340 80,800 170,000 188,300 $ 499,440 $ 96,300 105,000 206,000 136,950 $ 544,250 $ 25, 800 53,600 408,000 170,000 156,180 $ 54,200 117,400 402, 500 206,000 63,766 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. (Do not round intermediate calculations.) 1A Current Ratid 1A Acid Test Ratio 1A Acct Rec Turn 1A Invent Turnover 1A Days Sal in 1A Days Sal Inv Uncol 1B short term For both companies compute the current ratio. (a) Company Current Ratio Denominator: Numerator: 1 = II 1 Current Ratio Current ratio to 1 Barco / 11 Kyan / II to 1 1A Current Ratio 1 A Adid Test Ratio 1 A Acct Rec Turn 1 A Invent Turnover 1A Days Sal in 1A Days Sal Inv Uncol 1B short term For both companies compute the acid-test ratio. (b) Acid-Test Ratio Company Numerator: Denominator: Acid-Test Ratio 1 Acid-test ratio 1 to 1 Barco Kyan / to 1 1A Current Ratio 1A Acid Test Ratio 1 A Acct Rec Turn 1A Invent Turnover 1A Days Sal in Inv 1A Days Sal Uncol 1B short term For both companies compute the accounts (including notes) receivable turnover. (c) Accounts Receivable Turnover Company Numerator: Denominator: Accounts Receivable Turnover Accounts receivable turnover Barco . times Kyan 1 times 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 inventory turnover. (d) Inventory Turnover Company Numerator: Denominator: = Inventory Turnover Inventory turnover / Barco / times Kyan / times 1A Current Ratio 1A Acid Test Ratio 1A Acct Rec Turn 1A Invent Turnover 1A Days Sal in 1A Days Sal Inv Uncol 1B short term For both companies compute the days' sales in inventory. Days' Sales in Inventory Denominator: Company Numerator: 1 x Days 1 = Days' Sales in Inventory Days' sales in inventory days days Barco 1 X = Kyan 1 1A Current Ratio 1A Acid Test Ratio 1A Acct Rec Turn 1 A Invent Turnover 1A Days Sal in Inv 1A Days Sal Uncol 1B short term For both companies compute the days' sales uncollected. (f) Days' Sales Uncollected Company Numerator: 1 Denominator: X Days Days' Sales Uncollected Days' sales uncollected / X = Barco / days Kyan / X = days 1A Current Ratio 1A Acid Test Ratio 1 A Acct Rec Turn 1A Invent Turnover 1 A Days Sal in Inv 1A Days Sal Uncol 1B short term Identify the company you consider to be the better short-term credit risk. Better short-term credit risk I Uncol 1B short term > Barco company Kyan company