Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The following information applies to the questions displayed below.) Summary information from the financial statements of two companies competing in the same industry follows. Kyan

image text in transcribed
image text in transcribed
image text in transcribed
The following information applies to the questions displayed below.) Summary information from the financial statements of two companies competing in the same industry follows. Kyan Company Barco Kyan Company Company Data from the current year-end balance sheets Assets Cash $ 22,000 $35,000 Accounts receivable, net 35,400 57,400 Current notes receivable (trade) 9.300 7.800 Merchandise inventory 84,440 128,500 Prepaid expenses 5,600 7,500 Plant assets, net 350,000 305,400 Total assets $506,740 $541.600 Barco Company Data from the current years income statement Sales $770,000 cost of goods sold 593.100 Interest expense 8,900 Income tax expense 14,800 Net income 153,200 Basic earnings per share 4.03 Cash dividends per share 3.79 $885.200 2.500 18.000 24,438 210, 262 5.10 4.03 Liabilities and Equity Current liabilities Long-term notes payable Connon stock, 35 par value Betained earnings Total liabilities and equity $ 65,340 $ 90,300 79,800 101,000 190.000 206,000 171,600 144,100 35067403541.600 Beginning-of-year balance sheet data Accounts receivable, not Current notes receivable (trade) Merchandise inventory Total assets Common stock, 55 par value Retained earnings $ 30,800 $ 54,200 57,600 1 ,400 408,000 392,500 190.000 206.000 162,420 100,074 Required: 1a. For both companies compute the (a) current ratio. (b) acid-test ratio, id accounts (including notes) receivable turnover, (d) inventory turnover (c) 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. Required: 1a. For both companies compute the (6) current ratio, (b) acid-test ratio, ( accounts (including notes) receivable turnover, (a) inventory turnover, (e) days' sales in inventory, and (1) days' sales uncollected. (Do not round intermediate calculations.) 1b. Identify the company you consider to be 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 1 A Invent Turnover 1A Days Sal in 1A Days Sal Uncol Reg 1B For both companies compute the current ratio. Current Ratio / Choose Denominator: Company Choose Numerator Current Ratio Current ratio Barco Oto 1 Kyan 14 Current Ratio 1A Acid Test Ratio > 2a. For both companies compute the profit margin ratio, (b) total asset turnover, (return on total assets, and return on common stockholders' equity. Assuming that share and each company's stock can be purchased at $95 per share, compute their (el price- earnings ratios and dividend yields. (Do not round intermediate calculations. Round your answers to 2 decimal places.) 2b. Identify which company's stock you would recommend as the better investment Complete this question by entering your answers in the tabs below. ZA Price Earn Ratio 2A Div Yield Reg 28 2A Pro Marg 2A Tot Asset 2A Ret on Tot 2A Ret On Com Stock Ratio Tum Assets Equity For both companies compute the profit margin ratio. Company Choose Numerator: Profit Margin Ratio Choose Denominator: - Profit margin ratio = Profit margin ratio OS OS Barco Kyan 2A Tel Asal Turne

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Modern Auditing

Authors: Graham Cosserat

1st Edition

0471810584, 9780471810582

More Books

Students also viewed these Accounting questions