Question

Summary information from the financial statements of two companies competing in the same industry follows. Problem 13-5A Comparative ratio analysis A1P3 T Barco Company Kyan Company Barco Сотрату Kyan Сотрату Sales Data from the current year-end balance sheets Assets Cash ... $19,500 Accounts receivable, net 37.400 Current notes receivable (trade).... 9.100 Merchandise inventory.......... 84.440 Prepaid expenses 5.000 Plant assets, net... 290,000 Total assets.. $445,440 $ 34,000 57.400 7.200 132.500 6.950 304,400 $542.450 Data from the current year's income statement $770,000 Cost of goods sold. 585, 100 Interest expense 7.900 Income tax expense..... 14,800 Net income ..................... 162.200 Basic earnings per share 451 Cash dividends per share............. $800,200 632,500 13,000 24,300 210,400 5.11 3.93 3.81 Liabilities and Equity Current liabilities Long-term notes payable. Common stock, 55 par value........ Retained earnings. Total liabilities and equity.... $ 61,340 80.800 180.000 123,300 $445.440 $ 93.300 101,000 206,000 142,150 $542.450 Beginning-of-year balance sheet data Accounts receivable, net Current notes receivable (trade) ........ Merchandise inventory Total assets.... . Common stock. $5 par value...... Retained earnings... $ 29,800 0 55,600 398,000 180,000 98,300 $ 54,200 0 107,400 382,500 206,000 93.600

Answer 1

Please give positive ratings so I can keep answering. Thanks!

Income Statement	Barco	Kyan			Barco	Kyan
Sales	770,000.00	880,200.00		Current Ratio	2.5	2.6
Cost of goods sold	585,100.00	632,500.00		Current Assets/Current Liabilities
Gross Profit	184,900.00	247,700.00
Interest Expense	7,900.00	13,000.00		Acid Test Ratio	1.1	1.1
Income before taxes	177,000.00	234,700.00		Quick Assets/Current Liabilities
Income tax expense	14,800.00	24,300.00
Net Income	162,200.00	210,400.00		Accounts Receivables Turnover	20.2	14.8
Basic Earnings per share	4.51	5.11		Sales Revenue/ Average Receivable
Cash Dividends per share	3.81	3.93
				Inventory Turnover	8.4	5.3
Balance Sheets				Cost of goods sold/Average Inventory
Assets	Barco	Kyan
Current Assets				Days sales in Inventory	43.7	69.2
Cash	19,500.00	34,000.00		365/Inventory Turnover
Accounts Receivable (net)	37,400.00	57,400.00
Current Notes Receivable (trade)	9,100.00	7,200.00		Number of days sales uncollected	22.0	26.8
Merchandise Inventory	84,440.00	132,500.00		Total Receivables/Sales*365 days
Prepaid Expenses	5,000.00	6,950.00
Total Current Assets	155,440.00	238,050.00		Remarks- Barco has better short term credit risk because all of the above ratios are better and more improved than Kyan.
Plant assets, net	290,000.00	304,400.00
Total Assets	445,440.00	542,450.00		Profit margin %	21.1%	23.9%
				Net Income/Net Sales
Liabilities & Stockholders' Equity
Liabilities				Total Assets Turnover Ratio	1.8	1.9
Current Liabilities	61,340.00	93,300.00		Sales Revenue/Average Assets
Long Term Note payable	80,800.00	101,000.00
Total Liabilities	142,140.00	194,300.00		Return on Total Assets	36.4%	38.8%
Common Stock	180,000.00	206,000.00		Net Income/Total Assets
Retained Earnings	123,300.00	142,150.00
Total Stockholders' Equity	303,300.00	348,150.00		Return on Common Stock holders Equity	53.5%	60.4%
Total Liabilities & Stockholders' Equity	445,440.00	542,450.00		Net Income/Common Stock holders Equity
Total Current Assets	155,440.00	238,050.00		Price Earnings Ratio	16.6	14.7
Less:				Market Price Per Share/ Earnings Per share on Common Stock
Inventory	84,440.00	132,500.00
Prepaid Expense	5,000.00	6,950.00		Dividend Yield	5.1%	5.2%
Quick Assets	66,000.00	98,600.00		Dividend Per share on Common Stock/ Market Price Per Share
				Remarks- Kyan is a better investment opportunity because all of the above ratios are better and more improved than Barco.
Barco	Current	Last Year		Kyan	Current	Last Year
Accounts Receivable (net)	37,400.00	29,800.00		Accounts Receivable (net)	57,400.00	54,200.00
Current Notes Receivable (trade)	9,100.00	-		Current Notes Receivable (trade)	7,200.00	-
Average Receivable (net)	38,150.00			Average Receivable (net)	59,400.00
Merchandise Inventory	84,440.00	55,600.00		Merchandise Inventory	132,500.00	107,400.00
Average Inventory	70,020.00			Average Inventory	119,950.00
Total assets	445,440.00	398,000.00		Total assets	542,450.00	382,500.00
Average assets	421,720.00			Average assets	462,475.00