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 $ 18,500 $ 30,000 Accounts receivable, not 38,400 54,400 Current notes receivable (trade) 9,400 8,400 Merchandise Inventory 84,940 132,500 Prepaid expenses 5,700 7,500 Plant assets, net 280,000 310,400 Total assets $436,940 $543,200 Barco Kyan Company Company Data from the current year's income statement Sales $790,000 $902,200 Cost of goods sold 586,100 640,500 Interest expense 7,500 10,000 Income tax expense 14,992 24,907 Net income 171,400 226, 793 Basic earnings per share 4.08 5.25 Cash dividends per share 3.77 3.91 Liabilities and Equity Current liabilities Long-term notes payable Common stock, $5 par value Retained earnings Total liabilities and equity $ 66,340 597,300 84,800 103,000 210,000 216,000 75,800 126.900 $436,940 $543,200 Beginning-of-year balance sheet data Accounts receivable, net current notes receivable (trade) Merchandise inventory Total Assets Common stock, $5 par value Retained earnings $ 30,800 $ 52,200 0 0 53,600 109.00 418.000 392,500 210,000 216,000 ,732 69,019 Required: 1a. For both companies compute the (a) current ratio, (b) acid-test ratio, (c) accounts (including notes) receivable turnover (c) inventory turnover. (e) days' sales in inventory, and (days' sales uncollected. (Do not round intermediate calculations.) 1b. Identify the company you consider to be better short-term credit risk, 1A Current Ratio 1A Acid Test Ratio 1A Acct Rec Turn 1A Invent Turnover 1A Days Salin Inv 1A Days Sal Uncol Reg 1B For both companies compute the current ratio. Current Ratio 7 Choose Denominator: Company Choose Numerator: Current Ratio Current ratio = to 1 Barco Kyan / to 1 1A Current Ratio 1A Acid Test 1 Acct Rec Ratio Turn 1A Invent Turnover 1A Days Sal in 1A Days Sal Uncol Iny Reg 1B For both companies compute the acid-test ratio. (6) Company Acid-Test Ratio Choose Numerator: Choose Denominator: Barco Kyan + + + Acid-Test Ratio Acid-test ratio to 1 to 1 + 1 1A Current Ratio 1A Acct Rec 1A Acid Test Ratio Turn 1A Invent Turnover 1A Days Sal in Inv 1A Days Sal Uncol Reg 1B For both companies compute the accounts (including notes) receivable turnover. Company Choose Numerator: Accounts Receivable Turnover 1 Choose Donominator: - Accounts Receivable Turnover Accounts receivable turnover Barco times Kyan times 1A Days Sal in Inv 1A Days Sal Uncol Reg 1B 1A Current 1A Acid Test 1A Acct Rec 1A Invent Ratio Ratio Turn murnover For both companies compute the inventory turnover (d) Inventory Turnover Company Choose Numerator: 1 Choose Denominator: = Inventory Turnover Inventory turnover times Barco 1 11 Kyan 1 times 1A Current Ratio 1A Acid Test Ratio 1A Acct Rec Tum IA Invent Turnover 1A Days Salin! 1A Days Sal Inv Uncol Reg 1B For both companies compute the days' sales in inventory. (0) Company Choose Numerator: Days Sales In Inventory 1 Choose Denominator: Days X Barco Days Sales In Inventory Days' sales in inventory days days X Kyan x 1A Current Ratio 1A Acid Test Ratio 1A Acct Rec Turn 1A Invent Turnover 1A Days Salin 1A Days Sal Iny Uncol Req 1B For both companies compute the days' sales uncollected. () CompanyChoose Numerator: DaysSales Uncollected Choose Denominator: X Days Days' Sales Uncollected Days' salos uncollected X Barco X days Kyan days 1A Current Ratio 1A Acid Test Ratio 1A Acct Rec Turn 1A Invent Turnover 1A Days Sal in 1A Days Sal Inv Uncol Reg 18 Identify the company you consider to be the better short-term credit risk. Better short-term credit risk