Summary information from the financial statements of two companies competing in the same industry TOHOWS Barco Company Kyan Company Barco kyan Company Company Data from the current year's income statement Sales $ 19,500 $ 34,080 Cost of goods sold 46,500 64,600 Interest expense 84,440 132,500 Income tax expense 5,000 6,950 Net income 290,000 304,400 Basic earnings per share $ 445,440 $ 542,450 Cash dividends per share Beginning-of-year balance sheet data 5 61,340 $ 93,300 Accounts receivable, net 80,800 101,000 Merchandise inventory 180,000 206,000 Total assets 123,300 142, 150 Common stock, $5 par value $ 445,440 5 542,450 Retained earnings Data from the current year-end balance sheets Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets Liabilities and Equity Current liabilities Long-ter notes payable Common stock, $5 par value Retained earnings Total liabilities and equity $ 770,000 $ 880,200 585, 180 632,500 7.900 13,000 14,828 24,300 162,280 210,400 4.51 5.11 3.81 3.93 $ 29,800 55,600 398,000 180,000 98,300 $ 54,200 107,400 382,500 206,000 93,600 Required: 10. For both companies compute the (a) current ratio. (b) acid-test ratio. ( accounts receivable turnover, (a) inventory turnover (c) 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. ces Complete this question by entering your answers in the tabs below. 1A Days Satin 1 Days Sal 18 short term Inv Uncol 1A Current 1A Add Test 1A Acct Rec 1A Invent Ratio Ratio Turn Turnover For both companies compute the current ratio. (a) Company Numerator Current assets Current Ratio Denominator Current liabilities $ 61,340 $ 93.300 Current Ratio Current ratio 101 1 to 1 Barco Kyan 1A Acct Rec 1A Current Ratio IA Acid Test Ratio 1A Invent Turnover 1B short term 1A Days Sal in 1A Days Sal Inv Uncol Tum ence For both companies compute the acid-test ratio. Acid-Test Ratio (b) Company Numerator: + Short-term investments Denominator: Current abilities Acid-Test Ratio Acid-test ratio oto 1 Cash Current receivables Barco Kyan 1 1 Oto 1 . 1A Current 1A Acid Test 1A Acct Rec 1A Invent A Days Salin 1A Days Sal Ratio 18 short term Ratio Turn Turnover Inv Uncol For both companies compute the accounts (including notes) receivable turnover. (c) Accounts Recevable Turnover Company Numerator: Denominator: Accounts Receivable Tumover 1 Accounts receivable turnover Barco O times Kyan 1 O times 1A Current Ratio 1A Acid Test Ratio 1A Acct Rec Turn 1A Invent Turnover 1A Days Sal in 1A Days Sal 18 short term Inv Uncol For both companies compute the inventory turnover. (d) Company Inventory Turnover Denominator: Numerator: 1 #11 1 Inventory Turnover Inventory turnover O times Barco 1 1 ### O times Kyan 1A Current Ratio 1A Acid Test Ratio 1A Acct Rec Tum 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) Days' Soles in Inventory Company Numerator: 7 Denominator: Days 1 Barco Kyan Days' Sales in Inventory Days' sales in inventory 0 days = 1 0 days 1A Current Ratio 1B short term 1A Acid Test Ratio 1A Acct Rec Turn 1A Invent Turnover 1A Days Sal in 1A Days Sal Inv Uncol For both companies compute the days' sales uncollected Days' Sales Uncollected Denominator: Days Company Numerator: 1 ## 1 X Days' Sales Uncollected Days' sales uncollected 0 days o days Il 1 Barco Kyan x = 1A Current Ratio 1A Acid Test Ratio 1A Acct Rec Turn 1A Invent Turnover 1B short term 1A Days Sal in 1A Days Sal Inv Uncol Identify the company you consider to be the better short-term credit risk. Better short-term credit risk