Required information [The following information applies to the questions displayed below.] Forten Company's current year income statement, comparative balance sheets, and additional information follow. For the year, (1) all sales are credit sales. (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, and (5) Other Expenses are paid in advance and are initially debited to Prepaid Expenses. FORTEN COMPANY Comparative Balance Sheets December 31 Current Year Prior Year Assets Cash Accounts receivable $ 58,900 74,830 284,656 $ 79,500 56,625 257,800 Inventory Prepaid expenses 1,270 2,015 Total current assets 419,656 395,940 Equipment 151,500 114,000 Accum. depreciation Equipment (39,625) (49,000) Total assets $531,531 $460,940 Liabilities and Equity Accounts payable $123,675 $ 59,141 11,800 7,200 70,941 130,875 Short-term notes payable Total current liabilities Long-term notes payable Total liabilities 62,000 54,750 132,941 185,625 Equity Common stock, $5 par value 171,750 156,2501 Paid-in capital in excess of par, common stock Retained earnings 46,500 0 180,340 119,065 $460,940 Total liabilities and equity $531,531 FORTEN COMPANY Income Statement For Current Year Ended December 31 Sales Cost of goods sold $612,500 291,000 321,500 Gross profit Operating expenses Depreciation expense $ 26,750 Other expenses 138,400 165, 150 Other gains (losses) Loss on sale of equipment (11,125) Income before taxes Income taxes expense 145,225 32,650 Net income $112,575 Additional Information on Current Year Transactions a. The loss on the cash sale of equipment was $11,125 (details in b). b. Sold equipment costing $64,875, with accumulated depreciation of $36.125, for $17,625 cash. c. Purchased equipment costing $102,375 by paying $42,000 cash and signing a long-term note payable for the balance. d. Borrowed $4,600 cash by signing a short-term note payable. e. Paid $53,125 cash to reduce the long-term notes payable. f. Issued 3,100 shares of common stock for $20 cash per share. g. Declared and paid cash dividends of $51,300. Required: 1. Prepare a complete statement of cash flows using the indirect method for the current year. (Amounts to be deducted should be indicated with a minus sign.) FORTEN COMPANY Statement of Cash Flows For Current Year Ended December 31 Cash flows from operating activities Adjustments to reconcile net income to net cash provided by operations: Cash flows from investing activities Cash flows from financing activities: Net increase (decrease) in cash Cash balance at December 31, prior year Cash balance at December 31, current year Hampton Company reports the following information for its recent calendar year. Income Statement Data Selected Year-End Balance Sheet Data Accounts receivable increase $70,000 $6,000 Sales Expenses: Inventory decrease 4,000 700 Cost of goods sold Salaries payable increase Salaries expense 36,000 12,000 5,000 Depreciation expense Net income $17,000 Required: Prepare the operating activities section of the statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign.) Statement of Cash Flows (partial) Cash flows from operating activities 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 Barco Company Company Company Kyan Company Data from the current year-end balance sheets Data from the current year's income statement Sales Assets $780,000 $924,200 Cash 586,100 646,500 Accounts receivable, net 8,300 15,000 Merchandise inventory $ 21,500 $ 32,000 33,400 59,400 84,440 130,500 5,800 7,750 350,000 306,400 Cost of goods sold Interest expense Income tax expense Net income 14,992 25,514 170,608 237,186 Prepaid expenses Plant assets, net Total assets Basic earnings per share 4.27 5.76 $495,140 $536,050 Cash dividends per share 3.77 3.95 Liabilities and Equity Current liabilities. Beginning-of-year balance sheet data Accounts receivable, net $ 31,800 Long-term notes payable Merchandise inventory $68,340 $ 95,300 78,800 113,000 200,000 206,000 Total assets 148,000 121,750 Common stock, $5 par value Retained earnings $ 51,200 107,400 392,500 206,000 61,600 418,000 200,000 Common stock, $5 par value Retained earnings Total liabilities and equity $495,140 $536,050 128, 192 47,304 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 ( 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 1A Acid Test 1A Acct Rec Ratio Ratio Turn 1A Invent 1A Days Sal in 1A Days Sal 18 short term Inv Turnover Uncol For both companies compute the current ratio. Current Ratio Choose Denominator: Company Choose Numerator: Current Ratio Current ratio Barco to 1 1 1 Kyan to 1 1A Current Rate 1A Acid Test Ratio > 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 Barco Kyan Company Company Company Company Data from the current year-end balance sheets Data from the current year's income statement Sales Assets $780,000 $924,200 Cash Cost of goods sold 586,100 646,500 Accounts receivable, net Interest expense 8,300 15,000 $ 21,500 $32,000 33,400 59,400 84,440 130,500 5,800 7,750 14,992 25,514 Income tax expense Net income 170,608 237,186 Merchandise inventory Prepaid expenses Plant asseto, net Total assets 350,000 306,400 Basic earnings per share 4.27 5.76 $495,140 $536,050 Cash dividends per share 3.77 3.95 Liabilities and Equity Beginning-of-year balance sheet data Accounts receivable, net $ 31,000 $51,200 Current liabilities Long-term notes payable $60,340 $ 95,300 78,800 113,000 200,000 206,000 Merchandise inventory 61,600 107,400 Common stock, 55 par value Total assets 418,000 392,500 Retained earnings 148,000 121,750 Common stock, $5 par value $495,140 $536,050 Retained earnings 200,000 206,000 47,304 Total liabilities and equity 128,192 2a. For both companies compute the (a) profit margin ratio, (b) total asset turnover, (c) return on total assets, and (d) return on common stockholders' equity. Assuming that each company's stock can be purchased at $90 per share, compute their (e) 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. 2A Prof Mar 2A Tat Asset 2A Ret on Tat Ratio Turn Assets 2A Price Earn 2A Div Yield 2A Ret On Com Stock Reg 28 Ratio For both companies compute the profit margin ratio. Profit Margin Ratio Company Choose Numerator: Choose Denominator: Profit margin ratio =Profit margin ratio Barco 1 Kyan 1 2A Prof Mar Ratio 2A Tot Asset Turn >