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 here:

A. Calculate the following ratios for both Carson and BGT:

Current ratio Times interest earned

Inventory turnover Total asset turnover

Operating profit margin Operating return on assets

Debt ratio Average collection period

Fixed asset turnover 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		$1,950			$1,510
Accounts receivable		4,510			6,030
Inventories		1,480			2,510
Current assets		$7,940			$10,050
Net fixed assets		15,970			25,030
Total assets		$23,910			$35,080
Accounts payable		$2,550			$4,970
Accrued expenses		960			1,510
Short-term notes payable		3,480			1,540
Current liabilities		$6,990			$8,020
Long-term debt		8,020			4,050
Owners' equity		8,900			23,010
Total liabilities and owners' equity		$23,910			$35,080

	Carson Electronics, Inc. Income Statement ($000)			BGT Electronics, Inc. Income Statement ($000)
Net sales (all credit)		$47,980			$70,000
Cost of goods sold		(36,050)			(42,010)
Gross profit		$11,930			$27,990
Operating expenses		(7,960)			(11,990)
Net operating income		$3,970			$16,000
Interest expense		(1,130)			(600)
Earnings before taxes		$2,840			$15,400
Income taxes (35 %35%)		( 994 )			(5,390)
Net income		$ 1, 846			$10,010