! Required information [The following information applies to the questions displayed below.] Summary information from the financial statements of two companies competing in the same industry follows. Barco Kyan Company Company Data from the current year-end balance sheets Assets Cash $ 21,000 $ 34,000 Accounts receivable, net 37,400 55,400 Merchandise inventory 84,740 134,500 Prepaid expenses 5,500 7,550 Plant assets, net 290,000 305,400 Total assets $438,640 $536,850 Barco Kyan Company Company Data from the current year's income statement Sales $ 810,000 $910, 200 Cost of goods sold 589,100 646,500 Interest expense 9,000 16,000 Income tax expense 15,569 25, 128 Net income 196,331 222,572 Basic earnings per share 5.77 4.72 Cash dividends per share 3.73 4.01 Liabilities and Equity Current liabilities Long-term notes payable Common stock, $5 par value Retained earnings Total liabilities and equity $ 61,340 $ 92,300 86,800 109,000 170,000 236,000 120,500 99,550 $438,640 $536,850 Beginning-of-year balance sheet data Accounts receivable, net Merchandise inventory Total assets Common stock, $5 par value Retained earnings $ 31,800 $ 57,200 57,600 109,400 398,000 422,500 170,000 236,000 50,989 66,250 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 (1) days' sales uncollected. (Do not round intermediate calculations.) 1b. Identify the company you consider to be the better short-term credit risk. 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 For both companies compute the current ratio. (a) Company Choose Numerator: Current Ratio 1 Choose Denominator: Current Ratio 1 Current ratio Barco / = 0 to 1 Kyan 1 = 0 to 1 1A Current Ratio 1A Acid Test Ratio 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 For both companies compute the acid-test ratio. (b) Acid-Test Ratio Company Choose Numerator: Choose Denominator: Acid-Test Ratio + + / Acid-test ratio Barco + + / olto 1 Kyan + + oto 1 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 For both companies compute the accounts (including notes) receivable turnover. (c) Accounts Receivable Turnover Company Choose Numerator: 1 Choose Denominator: Accounts Receivable Turnover 1 = Accounts receivable turnover Barco / = 0 times Kyan 1 = 0 times 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 For both companies compute the inventory turnover. Inventory Turnover (d) Company Choose Numerator: 1 Choose Denominator: Inventory Turnover / Inventory turnover Barco 7 = 0 times Kyan / 0 times 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 For both companies compute the days' sales in inventory. (e) Days' Sales in Inventory 1 Choose Denominator: Company Choose Numerator: Days = Days' Sales in Inventory = Days' sales in inventory 1 Barco / = 0 days Kyan 1 = o days 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 For both companies compute the days' sales uncollected. Days' Sales Uncollected (f) CompanyChoose Numerator: 1 Choose Denominator: Days = Days' Sales Uncollected / X = Days' sales uncollected Barco 1 X = 0 days Kyan / 0 days
