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 found below:

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 its operations.

	Carson Electronics, Inc. Balance Sheet ($000)			BGT Electronics, Inc. Balance Sheet ($000)
Cash		$1,960			$1,470
Accounts receivable		4,500			6,050
Inventories		1,500			2,500
Current assets		$7,960			$10,020
Net fixed assets		15,970			25,000
Total assets		$23,930			$35,020
Accounts payable		$2,480			$5,010
Accrued expenses		970			1,500
Short-term notes payable		3,450			1,470
Current liabilities		$6,900			$7,980
Long-term debt		7,980			4,000
Owners' equity		9,050			23,040
Total liabilities and owners' equity		$23,930			$35,020

	Carson Electronics, Inc. Income Statement ($000)			BGT Electronics, Inc. Income Statement ($000)
Net sales (all credit)		$47,960			$69,950
Cost of goods sold		(36,050)			(41,960)
Gross profit		$11,910			$27,990
Operating expenses		(7,970)			(12,050)
Net operating income		$3,940			$15,940
Interest expense		(1,120)			(580)
Earnings before taxes		$2,820			$15,360
Income taxes (40 %40% )		(1,128)			(6,144)
Net income		$1,692			$9,216