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 Company Company Data from the current year-end balance sheets Assets Cash $ 19,500 $ 34,000 Accounts receivable, net 46,500 64,600 Merchandise inventory 84,440 132,500 Prepaid expenses 5,000 6,950 Plant assets, net 290,000 304,400 Total assets $445,440 $542,450 Barco Kyan Company Company Data from the current year's income statement Sales $770,000 $880,200 Cost of goods sold 585,100 632,500 Interest expense 7,900 13,000 Income tax expense 14,800 24,1300 Net income 162,200 210,400 Basic earnings per share 4.51 5.11 Cash dividends per share 3.81 3.93 1 Beginning-of-year balance sheet data Accounts receivable, net $ 29,800 $ 54,200 Merchandise inventory 55,600 107,400 Total assets 398,000 382,1500 Common stock, $5 par value 180,000 206,000 Retained earnings 98,300 93,600 Liabilities and Equity Current liabilities Long-term notes payable Common stock, $5 par value Retained earnings Total liabilities and equity $ 61,340 $ 93,300 80,800 101,000 180,000 206,000 123,300 142,150 $445,440 $542,450 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 (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 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 Choose Denominator: Choose Numerator: 1 = 1 = Current Ratio Current ratio to 1 1 = Barco Kyan 1 = to 1 Acid-Test Ratio (b) Company Choose Numerator: Choose Denominator: = Acid-Test Ratio + + / Acid-test ratio Barco + + + + / to 1 Kyan + / = to 1 (c) Company Choose Numerator: Accounts Receivable Turnover Choose Denominator: 1 1 = Accounts Receivable Turnover Accounts receivable turnover times times Barco 1 Kyan / II = (d) Company Inventory Turnover Choose Denominator: Choose Numerator: 1 = II 1 11 Inventory Turnover Inventory turnover times times Barco 1 = 11 Kyan 1 (e) Company Days' Sales in Inventory Choose Denominator: Days Choose Numerator: 1 = / Days' Sales in Inventory Days' sales in inventory days Barco / X Kyan 1 = days (f) Days' Sales Uncollected Company Choose Numerator: 1 Choose Denominator: Days = Days' Sales Uncollected Days' sales uncollected 1 = Barco 1 = days days Kyan 1 =
