Carson Electronics€™ management has long viewed BGT Electronics as an industry leader and uses this firm as a model firm for analyzing its own performance. The balance sheets and income statements for the two firms are as follows:

a. Calculate the following ratios for both Carson and BGT:
Current ratio .........Operating return on assets
Times interest earned .....Debt ratio
Inventory turnover ......Average collection period
Total asset turnover .......Fixed asset turnover
Operating profit margin ....Return on equity
b. Analyze the differences you observe between the two firms. Comment on what you view as weaknesses in the performance of Carson as compared to BGT that Carson€™s management might focus on to improve itsoperations.

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Carson Electronics, Inc. Balance Sheet ($000) BGT Electronics, Inc. Balance Sheet ($000) Accounts receiva Inventories Current assets Net fixed assets Total assets 2,000 4,500 1,500 8,000 16,000 24,000 S 1,500 6,000 2,500 S10,000 25,000 $35,000 2,500 1,000 3,500 S 5,000 1,500 1,500 expenses Short-term notes payable Current liabilities Long-term debt Owners' equity Total liabilities and owners' equity 8,000 9,000 4,000 23,000 $35,000 $24,000 Carson Electronics, Inc. Income Statement ($000) S48,000 (36,000) S12,000 BGT Electronics, Inc. Income Statement ($000) $70,000 (42,000) $28,000 (12,000) Net sales (all credit) Cost of goods sold Gross profit Operating expenses Net operating income Interest expense Earnings before taxes Income taxes (40%) Net income (1,150) 2,850 .140) 550) 15,450 (6,180) 9270