[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 Company |
Kyan Company |
Barco Company |
Kyan Company |
|||||||||||
Data from the current year-end balance sheets | Data from the current year’s income statement | |||||||||||||
Assets | Sales | $ | 770,000 | $ | 880,200 | |||||||||
Cash | $ | 19,500 | $ | 34,000 | Cost of goods sold | 585,100 | 632,500 | |||||||
Accounts receivable, net | 46,500 | 64,600 | Interest expense | 7,900 | 13,000 | |||||||||
Merchandise inventory | 84,440 | 132,500 | Income tax expense | 14,800 | 24,300 | |||||||||
Prepaid expenses | 5,000 | 6,950 | Net income | 162,200 | 210,400 | |||||||||
Plant assets, net | 290,000 | 304,400 | Basic earnings per share | 4.51 | 5.11 | |||||||||
Total assets | $ | 445,440 | $ | 542,450 | Cash dividends per share | 3.81 | 3.93 | |||||||
Liabilities and Equity | Beginning-of-year balance sheet data | |||||||||||||
Current liabilities | $ | 61,340 | $ | 93,300 | Accounts receivable, net | $ | 29,800 | $ | 54,200 | |||||
Long-term notes payable | 80,800 | 101,000 | Merchandise inventory | 55,600 | 107,400 | |||||||||
Common stock, $5 par value | 180,000 | 206,000 | Total assets | 398,000 | 382,500 | |||||||||
Retained earnings | 123,300 | 142,150 | Common stock, $5 par value | 180,000 | 206,000 | |||||||||
Total liabilities and equity | $ | 445,440 | $ | 542,450 | Retained earnings | 98,300 | 93,600 | |||||||
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.
1a.
(b)
Acid-Test Ratio | ||||||||||
Company | Choose Numerator | / | Choose Denominator | = | Acid-Test Ratio | |||||
Cash | + | Accounts Receivable, net | = | Quick Assets | / | Current Liabilities | = | Acid-Test Ratio | ||
Barco | 19500 | + | 46500 | = | 66000 | / | 61340 | = | 1.08 | to 1 |
Kyan | 34000 | + | 64600 | = | 98600 | / | 93300 | = | 1.06 | to 1 |
(e)
Days' Sales in Inventory | ||||||||
Company | Choose Numerator | / | Choose Denominator | x | Days | = | Days' Sales in Inventory | |
Merchandise inventory | / | Cost of goods sold | x | 365 | = | Days' Sales in Inventory | ||
Barco | 84440 | / | 585100 | x | 365 | = | 52.7 | days |
Kyan | 132500 | / | 632500 | x | 365 | = | 76.5 | days |
(f)
Days' Sales Uncollected | ||||||||
Company | Choose Numerator | / | Choose Denominator | x | Days | = | Days' Sales Uncollected | |
Current receivables, net | / | Net sales | x | 365 | = | Days' Sales Uncollected | ||
Barco | 46500 | / | 770000 | x | 365 | = | 22.0 | days |
Kyan | 64600 | / | 880200 | x | 365 | = | 26.8 | days |
1b. Better short-term credit risk: Barco
[The following information applies to the questions displayed below.] Summary information from the financial statements of...
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 year’s income statement Assets Sales $ 770,000 $ 880,200 Cash $ 19,500 $ 34,000 Cost of goods sold 585,100 632,500 Accounts receivable, net 46,500 64,600 Interest expense 7,900 13,000 Merchandise inventory 84,440 132,500 Income tax expense 14,800 24,300 Prepaid expenses 5,000 6,950 Net income 162,200...
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 year’s income statement Assets Sales $ 770,000 $ 880,200 Cash $ 19,500 $ 34,000 Cost of goods sold 585,100 632,500 Accounts receivable, net 46,500 64,600 Interest expense 7,900 13,000 Merchandise inventory 84,440 132,500 Income tax expense 14,800 24,300 Prepaid expenses 5,000 6,950 Net income 162,200...
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 Company Kyan Company Barco Company Kyan Company Data from the current year-end balance sheets Data from the current year’s income statement Assets Sales $ 770,000 $ 880,200 Cash $ 19,500 $ 34,000 Cost of goods sold 585,100 632,500 Accounts receivable, net 46,500 64,600 Interest expense 7,900 13,000 Merchandise inventory 84,440 132,500 Income tax expense...
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O 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 Assets Sales $770,000 $880, 200 Cash $ 19,500 $ 34,000 Coat of goods sold 585,100 632,500 Recounts receivable, net 46,500 64,600 Interest expense 7,900 13,000 Merchandise inventory 84,440 132,500 Income tax...
Summary Information from the financial statements of two companies competing in the same industry follows. Sales Barco Kyan Company Company Data from the current year-end balance sheets Assets Cash $ 19,500 $ 34,000 Accounts receivable, net 37,400 57.400 Current notes receivable (trade) 9,100 7,200 Merchandise inventory 84,440 132,500 Prepaid expenses 5,000 6,950 Plant assets, net 290,000 304,400 Total assets $445,440 $542,450 Barco Kyan Company Company Data from the current years income statement $ 770,000 $880,200 Cost of goods sold 585,100...
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