Question

Required Informatilon The folowing nformation apawes to the questions dlapiayed below Summary Informstion from the financlal statements oftwo companles competing In the asme Industry follawa. Barco Kyan Barco yan Company Company Data tron the current year-end balanca Data xon the currant year"a incona atatomant 5800,000 두881,2 584,100 636,00 21,00033,000 Coat of gooda sold Account receivable, net 39,4DO 52 , 400 Interegt expen Current 9.200 17.000 15.37724.27 191,323 203.373 5.63 194 t notaa scaivabla 1.000 8 8.800 Incona tax xpenaa Marchandiaa ivantory 84.740 132, 500 Vet incens .600 .450 Baaie aarninga par ahaea 330. 000 307.400 caah dividanda par sha** 3.94 5490.740 5341,530 31,800 550.00 5,600 111.400 39B.00D 372, 500 170.000 206. t00 102.117 9,205 LAab111tiea and Equity t 11abilitiea 5 70.340 5 94, 300 Current note ecaiabla (trade) Long-tern note payable Common stok paz 84, 80ง 103,000 Mechandiaa înrentasy 170,000 206,000 Total 교묘aet 165.600 138.230 Coanon atock, *5 par value Ratainad earninga Total 1iabi1i aqity stiaa and 40,740 5541.550 Ratainad aninga 1a. For both companies compute the () current rata,肉5cld-test ratio, [a-ccounts (including notes) recenable turnover, [d memory turnover, ( dsys' sales In Inventory, and ( days soles uncolected. (Do not round Intermediate calculations) 1b. Idemufy the company you conalder to be better shortterm credit riak. Complete this question by entering your answers in the tabs below. A Curran 1A Acid Test A At 1A Lnwent Days Sal in A Days Sal Rq 1B For bath compani cs compute the ourent ratio. (al Choote Numerator: Chooc Cument ratic Kyan Curront Ratio A Aoid Tect Rato : 1A Acid Test IA Days Sal in Inv 1A Days Sal 1A Current 1A Acct Rec Turn 1A Invent Req 1B For both companies compute the acid-test ratio. Compan Choose Numerator: Choose Denominator -Acid-Test Ratio Acid-test ratio 0 to 1 0 to 1 Barco Kyan 1A Current Ratio 1A Acct Rec Turn 》 1A Current 1A Acid Test 1A Acct Re1A Invent 1A Days Sal in 1A Days Sal Req 1B Uncol Ratio Ratio Turn Turnover Inv For both companies compute the accounts (including notes) receivable turnover. Accounts Receivable Turnover Company Choose Numerator: Choose Denominator: Accounts Receivable Turnover Accounts receivable turnover Barco 0 times Kyan 0 times A Acid Test Ratio 1A Invent Turnover > Complete this question by entering your answers in the tabs below. 1A Current 1A Acid Test 1A Acct Rc1A Invent 1 Days Sal in 1A Days Sal Req 1B Ratio Ratio Turn Turnover Inv Uncol For both companies compute the inventory turnover. vento ompany Choose Numerator:I Choose Denominator: Inventory Turnover Inventory turnover Barco 0 times Kyan 0 times 1A Current 1A Acid Test 1A Acct Re 1A Invent 1A Days Sain 1A Days Sal Req 18 Turn Turnover Inv Uncol For both companies compute the days' sales in inventory. Days Sales in Inventory Company Choose Numerator: Choose Denominator: Days Days' Sales in Inventory Days' sales in inventory x Barco 0 days 0 days Kyan Req 1B 1A Current 1A Acid Test 1A Acct Rec 1A Invent 1A Days Sal in 1A Days Sal Unco Inv Turnover Turn Ratio Ratio For both companies compute the days' sales uncollected. x DaysDays' Sales Uncollected Choose Denominator: CompanyChoose Numerator: - Days' sales uncollected 0 days 0 days Barco Kyan 1A Acid Test Ratio 1A Days Sal in Inv 1A Days Sal Uncol 1A Current Ratio 1A Acct Rec Turn 1A Invent Turnover Req 1B Identify the company you consider to be the better short-term credit risk. Better short-term credit risk

Answer 1

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Statement of Earnings	Barco		Kyan
Sales	800,000.00		881,200.00		G
Cost of goods sold	584,100.00		636,500.00		L
Gross Profit	215,900.00		244,700.00
Interest Expense	9,200.00		17,000.00
Income before Tax	206,700.00		227,700.00
Income Tax Expense	15,377.00		24,327.00
Net Income	191,323.00		203,373.00
Basic Earnings Per share	5.63		4.34
Cash Dividends Earnings Per share	3.76		3.94
Statement of Financial Position	Barco		Kyan
Assets	Current	Opening	Current	Opening
Cash	21,000.00		33,000.00
Accounts Receivable (Net)	39,400.00	31,800.00	52,400.00	50,200.00	P
Current Notes Receivable (Trade)	10,000.00	-	8,800.00	-
Merchandise Inventory	84,740.00	65,600.00	132,500.00	111,400.00
Prepaid Expense	5,600.00		7,450.00
Total Current Assets	160,740.00	97,400.00	234,150.00	161,600.00	A
Property Assets (Net)	330,000.00		307,400.00
Total Assets	490,740.00	398,000.00	541,550.00	372,500.00
Liabilities
Current Liabilities	70,340.00		94,300.00		B
Long Term Notes Payable	84,800.00		103,000.00
Total Long Term- Liabilities	84,800.00		103,000.00
Total Liabilities	155,140.00		197,300.00
Stockholders' Equity
Common Stock, $5 par	170,000.00	170,000.00	206,000.00	206,000.00
Retained Earnings	165,600.00	102,117.00	138,250.00	97,205.00
Total Stockholders' Equity	335,600.00	272,117.00	344,250.00	303,205.00
Total Liabilities & Stockholders' Equity	490,740.00	272,117.00	541,550.00	303,205.00
Total Current Assets	160,740.00		234,150.00
Less: Inventory	84,740.00		132,500.00
Less: Prepaid Expense	5,600.00		7,450.00
Quick Assets	70,400.00		94,200.00		E
Accounts Receivable (Net)	39,400.00	31,800.00	52,400.00	50,200.00
Current Notes Receivable (Trade)	10,000.00	-	8,800.00	-
Total	49,400.00	31,800.00	61,200.00	50,200.00
Average Accounts Receivable (Net)	40,600.00		55,700.00		H
Inventory	84,740.00	65,600.00	132,500.00	111,400.00
Average Inventory	75,170.00		121,950.00		K

Ans a- Current Ratio	Barco	Kyan
Current Assets/Current Liabilities	2.29	2.48	D=A/B
Ans b- Acid Test Ratio
Quick Assets/Quick Liabilities	1.00	1.00	F=E/B
Ans c- Accounts Receivables Turnover
Sales Revenue/Average Accounts Receivable	19.70	15.82	I=G/H
Ans d- Inventory Turnover
Cost of goods sold/Average Inventory	7.77	5.22	M=L/K
Ans e- Number of days sales in Inventory
365/Inventory Turnover	46.97	69.93	N=365/M
Ans f- Number of days sales uncollected
Accounts Receivables/Sales*365 days	17.98	21.70	O=P/G*365
All the ratios of Barco is better than Kyan. So Barco has better short-term credit risk.