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 kyan Barco Kyan Company Company Company Company Data from the current year-end Data from the current year's balance sheets income statement Assets Sales $ 770,000 $901,200 Cash $ 20,500 $ 30,000 Cost of goods sold 592,100 636,500 Accounts receivable, net 35,400 54,400 Interest expense 7,700 17,000 Merchandise inventory 84,340 138,500 Income tax expense 14,800 24,879 Prepaid expenses 5,400 7,650 Net income 155,400 222, 821 Plant assets, net 308,000 308,400 Basic earnings per share 3.53 5.16 Total assets $ 445,640 $ 538,950 Cash dividends per share 3.74 3.94 Liabilities and Equity Beginning-of-year balance sheet data Current liabilities $ 64,340 $ 96,300 Accounts receivable, net $ 25,800 $ 55,200 Long-term notes payable 84,800 111,000 Merchandise inventory 63,600 117,400 Common stock, $5 par value 220,000 216,080 Total assets 408,000 372,500 Retained earnings 76,500 115,65@_ Common stock, $5 par value 220,000 216,800 Total liabilities and equity $ 445,640 $ 538,950 Retained earnings 85, 660 63,037 Required: 1a. For both companies compute the (a) current ratio, (b) acid-test ratio, (c) accounts receivable turnover, () inventory turnover. (e) days' sales in inventory, and (7 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. 592,100 7,700 14,808 155,400 3.53 3.74 Check my work 56,500 17,000 24,879 222,821 5.16 3.94 Lash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets Liabilities and Equity Current liabilities Long-term notes payable Connon stock, $5 par value Retained earnings Total liabilities and equity $ 20,500 $ 30,00 Lost of goods sold 35,400 54,400 Interest expense 84,340 138,500 Income tax expense 5,400 7,650 Net income 300,000 308,400 Basic earnings per share $ 445,640 $ 538,950 Cash dividends per share Beginning-of-year balance sheet data $ 64,340 $ 96,380 Accounts receivable, net 84,800 111,000 Merchandise inventory 220,000 216,000 Total assets 76,500 115,65 Common stock, $5 par value $ 445,640 $ 538,950 Retained earnings $ 25,880 63,600 488,098 220,000 85,660 $ 55,200 117,400 372,500 216,000 63,037 2a. For both companies compute the (a) profit margin ratio, (b) total asset turnover, () return on total assets, and (c) return on equity. Assuming that each company's stock can be purchased at $100 per share, compute their (e) price-earnings ratios and (1) dividend yields. 2b. Identify which company's stock you would recommend as the better investment Complete this question by entering your answers in the tabs below. 2A Prof Mar Ratio 2A Tot Asset 2A Ret on Tot Turn Assets 2A Ret On Equity 2A Price Earn Ratio 2A Div Yield Reg 28
