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 Company Barco Company Kyan Company Data from the current year-end balance sheets Data from the current year's income statement Assets Sales $790,000 $ 884,200 Cash $ 18,000 38,400 $ 34,000 $ 61,340 80,800 $91,300 115,000 170,000 165,300 206,000 Total assets 127,200 Total liabilities and equity $ 477,448 $ 539,500 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 84,948 6,100 330,000 57,400 132,500 7,200 308,400 $ 477,448 $539,500 Cost of goods sold Interest expense Cash dividends per share Beginning-of-year balance sheet data Accounts receivable, net Merchandise inventory Common stock, $5 par value Retained earnings 588,100 640,500 9,000 10,000 Income tax expense Net income Basic earnings per share 15,185 24,410 177,715 209,290 5.23 5.08 3.76 3.96 $ 29,800 59,600 $ 56,200 105,400 388,000 412,500 170,000 206,000 115,425 81,062 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 (f) 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 1A Acid Test Ratio Ratio 1A Acct Rec Turn 1A Invent 1A Days Sal in 1A Days Sal Turnover Inv Uncol 1B short term For both companies compute the current ratio. (a) Company Numerator: Barco Kyan Current Ratio Denominator: = Current Ratio = Current ratio 0 to 1 0 to 1 < 1A Current Ratio 1A Acid Test Ratio > 1A Current 1A Acid Test 1A Acct Rec Ratio Ratio Turn 1A Invent Tumover 1A Days Sal in 1A Days Sal Inv 1B short term Uncol For both companies compute the acid-test ratio. (b) Company Barco Kyan + Acid-Test Ratio Numerator: Denominator: = Acid-Test Ratio Acid-test ratio + 0 to 1 0 to 1 < 1A Current Ratio 1A Acct Rec Turn > 1A Current 1A Acid Test Ratio Ratio 1A Acct Rec Turn 1A Invent 1A Days Sal in 1A Days Sal Tumover Inv Uncol 1B short term For both companies compute the accounts (including notes) receivable turnover. (c) Company Numerator: Accounts Receivable Turnover Denominator: = Barco Kyan Accounts Receivable Turnover Accounts receivable turnover 0 times 0 times < 1A Acid Test Ratio 1A Invent Turnover > 1A Invent Turnover 1A Days Sal in 1A Days Sal Inv 1B short term Uncol 1A Current 1A Acid Test 1A Acct Rec Ratio Ratio Turn For both companies compute the inventory turnover. (d) Company Inventory Turnover Numerator: I Denominator: = Inventory Turnover = Inventory turnover Barco 0 times Kyan 1 Otimes < 1A Acct Rec Turn 1A Days Sal In Inv > 1A Current Ratio 1A Acid Test Ratio 1A Acct Rec Turn 1A Invent Turnover For both companies compute the days" sales in inventory. (e) Company Numerator: 1A Days Sal in 1A Days Sal 18 short term Inv Days' Sales In Inventory Uncol Barco Kyan Denominator: x Days Days' Sales In Inventory = Days' sales in inventory = 0 days 0days < 1A Invent Turnover 1A Days Sal Uncol 1A Current Ratio 1A Acid Test Ratio 1A Acct Rec Turn 1A Invent Turnover 1A Days Sal in 1A Days Sal Inv 1B short term Uncol For both companies compute the days" sales uncollected. Company Barco Kyan Numerator: I Days' Sales Uncollected Denominator: x Days = = Days' Sales Uncollected Days' sales uncollected 0 days 0 days 1A Days Sal in Inv 1B short term > 1A Current 1A Acid Test Ratio Ratio 1A Acct Rec Turn 1A Invent Tumover 1A Days Sal in 1A Days Sal Inv Uncol 1B short term Identify the company you consider to be the better short-term credit risk. Better short-term credit risk < 1A Days Sal Uncol 1B short term >