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 balance sheets Data from the current year's income statement Assets Sales $ 790,000 $ 922,200 Cash $ 22,000 $ 33,000 Cost of goods sold 592,100 636,500 Accounts receivable, net 39,400 57,400 Merchandise inventory 84,640 Prepaid expenses Plant assets, net 5,700 330,000 307,400 Total assets $ 481,740 $ 539,450 Current liabilities Liabilities and Equity Long-term notes payable Common stock, $5 par value Retained earnings $ 69,340 $ 98,300 84,800 210,000 117,600 103,000 236,000 Total assets 102,150 Total liabilities and equity $ 481,740 $ 539,450 134,500 7,150 Interest expense Income tax expense Net income Basic earnings per share Cash dividends per share Beginning-of-year balance sheet data Accounts receivable, net Merchandise inventory Common stock, $5 par value Retained earnings 7,700 12,000 15,185 25,459 175,015 248,241 4.17 3.78 5.26 3.91 $ 26,800 $ 53,200 57,600 111,400 378,000 382,500 210,000 236,000 101,345 38,461 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 (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 Invent Turnover 1A Days Sal in Inv 1A Days Sal Uncol 1B short term 1A Current 1A Acid Test 1A Acct Rec Ratio Ratio Turn For both companies compute the current ratio. (a) Company Barco Kyan Numerator: Current Ratio Denominator: = Current Ratio = Current ratio = 0 to 1 = 0 to 1 < 1A Current Ratio 1A Acid Test Ratio > For both companies compute the acid-test ratio. (b) Company Numerator: Barco Kyan ++ + ++ + Acid-Test Ratio < 1A Current Ratio Denominator: 1 1 1 = Acid-Test Ratio Acid-test ratio 0 to 1 0 to 1 1A Acct Rec Turn > For both companies compute the accounts (including notes) receivable turnover. (c) Accounts Receivable Turnover Company Numerator: Barco Kyan 1 Denominator: = Accounts Receivable Turnover = Accounts receivable turnover = 0 times = 0 times < 1A Acid Test Ratio 1A Invent Turnover > 1A Invent 1A Days Sal in 1A Days Sal Turnover Inv Uncol 1B sho 1A Current 1A Acid Test 1A Acct Rec Ratio Ratio Turn For both companies compute the inventory turnover. (d) Company Numerator: Barco Kyan Inventory Turnover Denominator: < 1A Acct Rec Turn II = = = Inventory Turnover Inventory turnover 0 times 0 times 1A Days Sal in Inv > 1A Current 1A Acid Test 1A Acct Rec Ratio Ratio Turn 1A Invent Turnover 1A Days Sal in 1A Days Sal Inv Uncol 1B short term For both companies compute the days' sales in inventory. (e) Company Days' Sales in Inventory. Denominator: Barco Kyan Numerator: I 1 1 < 1A Invent Turnover Days = Days' Sales in Inventory = Days' sales in inventory = 0 days = 0 days 1A Days Sal Uncol > 1A Current Ratio 1A Acid Test 1A Acct Rec Ratio Turn 1A Invent Turnover 1A Days Sal in 1A Days Sal Inv Uncol 1B short term For both companies compute the days' sales uncollected. (f) Company Barco Kyan Days' Sales Uncollected Numerator: 1 Denominator: Days = Days' Sales Uncollected 1 = Days' sales uncollected = 0 days 1 = 0 days < 1A Days Sal in Inv 1B short term > 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 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 >