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