Summary information from the financial statements of two companies competing in the same industry follows. Barco Kyan Company Barco Kyan Company Company Company Data from the current year-end balance sheets Data from the current year's income statement Sales Cost of goods sold $780,000 $912, 200 644 500 8,900 17,000 25 183 Assets Cash Accounts receivable, net Current notes receivable (trade) Merchandise inventory Prepaid expenses Plant assets, net 18,000 32,000 593,100 54,400 Interest expense 36,400 9,600 84,540 138,500 Net income 5,600 340,000 307,400 Cash dividends per share Income tax expense 8,600 14,992 163,008 225,517 $.47 Basic earnings per share 7,250 3.88 3.96 3.76 Total assets $494,140 $548,150 Beginning-of-year balance sheet data Accounts receivable, net 52 200 $ 30,800 Liabilities and Equity Current 1iabilities s 66,340 $101,300 Current notes receivable (trade) 80,800 210,000 206,000 Total assets 137,000 105 400 412, s00 206 000 Merchandise inventory 55,600 448,000 Long-term notes payable Common stock, $5 par value Retained earnings 115,000 Common stock, $5 par value 125,850 210,000 Total liabilities and equity $494,140 $548,150 Retained earnings 131,912 63,485 Required: 1a. For both companies compute the (a) current ratio, (b) acid-test ratio, (c) accounts (including notes) 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 better short-term credit risk. For Doun companies compute the current rauo. Current Ratio (a) Choose Denominator: Company Choose Numerator: Current assets Current Ratio Current ratio 0to 1 Barco Kyan 0 to 1 Il For both companies compute the acid-test ratio. Acid-Test Ratio (b) Choose Denominator: = Acid-Test Ratio Company Choose Numerator: Acid-test ratio O to 1 Barco |yan 0 to 1 For both companies compute the accounts (including notes) receivable turnover. (c) Accounts Receivable Turnover IChoose Denominator: Accounts Receivable Turnover Company Choose Numerator: =Accounts receivable turnover 0 times Barco Kyan 0 times For both companies compute the inventory turnover. Inventory Turnover Choose Denominator: (d) Inventory Turnover Company Choose Numerator: =|Inventory turnover 0times Barco |yan 0 times For both companies compute the days' sales uncollected Days Sales Uncollected (f) Choose Denominator: x Days Days' Sales Uncollected CompanyChoose Numerator: =Days' sales uncollected X 0 days Barco X 0 days yan = Identify the company you consider to be the better short-term credit risk. Better short-term credit risk
