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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
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 Data from the current year-end Data from the current year's balance sheets income statement Assets Sales $790,000 $ 923,200 Cash $ 20,500 $ 35,000 Cost of goods sold 596,100 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 5,200 360,000 $ 504,840 $ 531,550 34,400 51,400 Interest expense 8,300 652,500 15,000 84,740 130,500 7,250 Income tax expense 15,185 25,487 Net income 170,415 230,213 307,400 Basic earnings per share 4.73 4.88 Cash dividends per share 3.74 3.98 Beginning-of-year balance sheet data $ 61,340 82,800 180,000. $92,300 Accounts receivable, net $ 30,800 $ 50,200 101,000 Merchandise inventory 55,600 117,400 236,000 Total assets 408,000 372,500 180,700 102,250 $ 504,840 $ 531,550 Common stock, $5 par value Retained earnings 180,000 236,000 144,925 59,893 Required: 1a. For both companies compute the (a) current ratio, (b) acid-test ratio, (c) accounts receivable turnover, (c) inventory turnover, (e) days' sales in inventory, and (4) 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 Current Ratio 1A Acil Test 1A Acct Rec Rebo Turn Inv 1A Invent 1A Days Sal in 1A Days Sal Turnover Uncol 18 short term For both companies compute the acid-test ratio. (b) Company Barcol Kyan + Acid-Test Ratio Numerator: Denominator: Acid-Test Ratio Acid-test ratio 0 to 1 <1a current ratio 1a acct rec turn> 0 to 1
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