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	$	800,000		$	921,200
Cash	$	18,000		$	32,000			Cost of goods sold		588,100			634,500
Accounts receivable, net		38,400			52,400			Interest expense		7,800			11,000
Merchandise inventory		84,740			142,500			Income tax expense		15,377			25,432
Prepaid expenses		6,000			7,550			Net income		188,723			250,268
Plant assets, net		350,000			311,400			Basic earnings per share		4.97			5.54
Total assets	$	497,140		$	545,850			Cash dividends per share		3.71			4.00
Liabilities and Equity								Beginning-of-year balance sheet data
Current liabilities	$	71,340		$	98,300			Accounts receivable, net	$	31,800		$	54,200
Long-term notes payable		78,800			113,000			Merchandise inventory		55,600			109,400
Common stock, $5 par value		190,000			226,000			Total assets		408,000			372,500
Retained earnings		157,000			108,550			Common stock, $5 par value		190,000			226,000
Total liabilities and equity	$	497,140		$	545,850			Retained earnings		109,257			39,082

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 Ratio
• 1A Acct Rec Turn
• 1A Invent Turnover
• 1A Days Sal in Inv
• 1A Days Sal Uncol
• 1B short term

ALL BLANK BOXES MUST BE ANSWERED

(a)	Current Ratio
Company	Choose Numerator:	/	Choose Denominator:	=	Current Ratio
	Current assets	/	Current liabilities	=	Current ratio
Barco		/		=	0	to 1
Kyan

(b)		Acid-Test Ratio
Company		Choose Numerator:			Choose Denominator:	=	Acid-Test Ratio
	+	+		/		=	Acid-test ratio
Barco	+	+		/		=	0	to 1
Kyan	+	+		/			0	to 1

(c)	Accounts Receivable Turnover
Company	Choose Numerator:	/	Choose Denominator:	=	Accounts Receivable Turnover
		/		=	Accounts receivable turnover
Barco		/		=	0	times
Kyan		/		=	0	times

(d)	Inventory Turnover
Company	Choose Numerator:	/	Choose Denominator:	=	Inventory Turnover
		/		=	Inventory turnover
Barco		/		=	0	times
Kyan		/		=	0	times

(e)	Days Sales in Inventory
Company	Choose Numerator:	/	Choose Denominator:	x	Days	=	Days Sales in Inventory
		/		x		=	Days sales in inventory
Barco		/		x		=	0	days
Kyan		/		x		=	0	days

(f)	Days' Sales Uncollected
Company	Choose Numerator:	/	Choose Denominator:	x	Days	=	Days' Sales Uncollected
		/		x		=	Days' sales uncollected
Barco		/		x		=	0	days
Kyan		/		x		=	0	days

Better short-term credit risk