Question

Barco Куan Сompany Barco Куan Сompany Сompany Сопрany Data from the current year-end balance sheets Assets Data from the current year's income statement Sales $790,000 $901,200 591 100 19,000 35,000 37,400 84,340 5,800 320,000 305,400 Cash Cost of goods sold Interest expense Income tax expense Net income 640,500 Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net 54,400 134,500 7,600 8,500 15 185 175,215 $.48 16,000 24,879 219,821 Basic earnings per share 5.09 $466,540 $536,900 Total assets Cash dividends per share 4.01 3.78 Liabilities and Equity Current liabilities Long-term notes payable Common stock, $5 par value Retained earnings Beginning-of-year balance sheet data Accounts receivable, net Merchandise inventory Total assets 32800 57,200 55,600 113,400 68,340 $101,300 82,800 160,000 155,400 116,600 $466,540 $536,900 103,000 216,000 438 000 402,500 Common stock, $5 par value Retained earnings 160,000 216,000 101145 Total liabilities and equity 70,011 Required: a. 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 For both companies compute the current ratio. Current Ratio /Choose Denominator: (a) Current Ratio Current ratio 0 to 1 0to 1 Company Choose Numerator: Barco |Куan For both companies compute the acid-test raio Acid Test Ratio (b) -Acid-Test Ratic Acid-test ratio Choose Denominator Company Choose Numerator: Barce oto 1 Kyan to1 For both companies compute the accounts (including notes) receivable turnover. Accounts Receivable Turnover (c) Choose Denominator: Company Choose Numerator Accounts Recelvable Turnover Accounts receivable tunover O times Вarco Kyan O times For both companies compute the inventory turnover. (d) Inventory Turnover Choose Denominator: Inventory Turnover Inventory turnover 0 times Company Choose Numerator: Barco |Кyan 0 times For both companies compute the days' sales in inventory. Days' Sales in Inventory (e) Company Choose Numerator: / Choose Denominator: Days' Sales in Inventory Days х Days' sales in inventory 0 days o days Вarco X Кyan For both companies compute the days' sales uncollected. Days' Sales Uncollected (1) Choose Denominator: =Days' Sales Uncollected Company Choose Numerator: x Days =Days' sales uncollected 0 days х Barco X O days Kyan X

Answer 1

(a)

Company	Choose Numerator	/	Choose Denominator	=	Current Ratio
	Current Asset	/	Current Liability	=	Current Ratio
Barco	$       146,540.00	/	$                   68,340.00	=	2.14	to 1
Kyan	$       231,500.00	/	$                 101,300.00	=	2.29	to 1

(b)

Acid Test Ratio
Company	Choose Numerator	/	Choose Denominator	=	Acid Test Ratio
	Current Asset - Inventory	/	Current Liability	=	Acid Test Ratio
Barco	$         62,200.00	/	$                   68,340.00	=	0.91	to 1
Kyan	$         97,000.00	/	$                 101,300.00	=	0.96	to 1

(c)

Account Receivable Turnover
Company	Choose Numerator	/	Choose Denominator	=	Account Receivable Turnover
	Credit Sales	/	Average Accounts Receivable	=	Account Receivable Turnover
Barco	$       790,000.00	/	$                   35,100.00	=	22.51	times
Kyan	$       901,200.00	/	$                   55,800.00	=	16.15	times

(d)

Inventory Turnover
Company	Choose Numerator	/	Choose Denominator	=	Inventory Turnover
	Cost of goods sold	/	Average Inventory	=	Inventory Turnover
Barco	$       591,100.00	/	$                   69,970.00	=	8.45	times
Kyan	$       640,500.00	/	$                 123,950.00	=	5.17	times

(e)

Day sales in inventory
Company	Choose Numerator	/	Choose Denominator	x	Days	=	Day sales in inventory
	Average Inventory	/	Cost of goods sold		365	=	Day sales in inventory
Barco	69,970	/	591,100.00		365	=	43.21	days
Kyan	123,950	/	640,500.00		365	=	70.64	days

(f)

Day sales uncollected
Company	Choose Numerator	/	Choose Denominator	x	Days	=	Day sales uncollected
	Average accounts receivable	/	Net Credit Sales		365	=	Day sales uncollected
Barco	35,100	/	790,000.00		365	=	16.22	days
Kyan	55,800	/	901,200.00		365	=	22.60	days