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Appendix $2$: Summary information from the financial statements of Barco and Kyan companies.

$\backslash$table$[[,\backslash$table$[[$Barco$],[$Company$]],\backslash$table$[[$Kyan$],[$Company$]],,\backslash$table$[[$Barco$],[$Company$]],\backslash$table$[[$Kyan$],[$Company$]]],[\backslash$table$[[$Data from the current year$-$end balance$],[$sheets$]],,,\backslash$table$[[$Data from the current year's income$],[$statement$]],,],[$Assets$,3,,$Sales,$$790,000,$$$928,200],[$Cash$,$$$22,000,$$$32,000,$Cost of goods sold,$590,100,648,500],[$Accounts recelvable, net,$33,400,59,400,$Interest expense,$8,600,18,000],[$Merchandise Inventory,$84,740,142,500,$Income tax expense,$15,185,25,625],[$Prepald expenses,$6,100,7,550,$Net Income,$176,115,236,075],[$Plant assets, net,$340,000,304,400,$Basic earnings per share,$5\mathrm{.}50,5\mathrm{.}73],[$Total assets,$$486,240,$$$545,850,$Cash dividends per share,$3\mathrm{.}77,4\mathrm{.}03],[\backslash$table$[[$Liabilities and Equity$],[$Current Ilabilitles$],[$Long$-$term notes payable$],[$Common stock, $$5$ par value$],[$Retalned earnings$]],\backslash$table$[[$$$68,340],[82,800],[160,000],[175,100]],\backslash$table$[[$$$102,300],[107,000],[206,000],[130,550]],\backslash$table$[[$Beginning$-$of$-$year balance sheet data$],[$Accounts recelvable, net$],[$Merchandlse Inventory$],[$Total assets$],[$Common stock, $$5$ par value$]],\backslash$table$[[$$$29,800],[61,600],[398,000],[160,000]],\backslash$table$[[$$$56,200],[105,400],[382,500],[206,000]]],[$Total llabilities and equity,$$486,240,$$$545,850,$Retalned earnings,$119,625,60,511]]$ PART $2(22$ pts$)$: Summary information from the financial statements of two companies competing in the same industry is provided in Appendix $2.$ Please answer the below question by using these statements.

Question $1(10$ pts$)$: For both companies, compute the current ratio, receivables turnover ratio inventory turnover ratio days' sales in inventory, and days' sales uncollected.

$\backslash$table$[[,$Barco,Kyan$],[$Current Ratio,,$],[$Receivables Turnover Ratio,,$],[$Inventory Turnover Ratio,,$],[$Days$\text{'}$ Sales in Inventory,,$],[$Days$\text{'}$ Sales Uncollectible,,$]]$

Question $2(4$ pts$)$: Assuming that you are a loan officer in a reputable bank and you are considering extending a credit line to only one company, either Barco or Kyan. Your responsibility is to recommend to your supervisor which company the bank will extend shortterm credit for $20$ days. $($Explain your rationale, please. Only the answer of Barco$/$Kyan will not be accepted$)$ Question $3(8$ pts$)$: $1$ year later, the debt$-$to$-$equity ratios for Barco and Kyan Companies are

calculated as the following.

a$.$ Do the comoanies have more or less debt in the year $20$XX versus one year ago $($the year

$20$XY$)?($Explain your rationale, please, Only the answer of less$/$more will not be accepted$)$

b$.$ Calculate the debt ratio for the two companies for the years $20$XX and $20$XY$.$

c$.$ If you were a creditor, to which company you want to extend credit? Answer based on

your debt ratio calculations and consider which company has more bankruptcy risk.

$($Explain xour rationale, please, Only the answer of Barco$/$Kyan will not be accepted$)$

Answer: