Problem $13-5$A $($Static$)$ Comparative ratio analysis LO P$3$

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Summary information from the financial statements of two companies competing in the same industry follows.

Barco Company Kyan Company Barco Company Kyan Company

Data from the current year$-$end balance sheets Data from the current year$$s income statement

Assets Sales $ $770,000$ $ $880,200$

Cash $ $19,500$ $ $34,000$ Cost of goods sold $585,100632,500$

Accounts receivable, net $46,50064,600$ Interest expense $7,90013,000$

Merchandise inventory $84,440132,500$ Income tax expense $14,80024,300$

Prepaid expenses $5,0006,950$ Net income $162,200210,400$

Plant assets, net $290,000304,400$ Basic earnings per share $4\mathrm{.}515\mathrm{.}11$

Total assets $ $445,440$ $ $542,450$ Cash dividends per share $3\mathrm{.}813\mathrm{.}93$

Liabilities and Equity Beginning$-$of$-$year balance sheet data

Current liabilities $ $61,340$ $ $93,300$ Accounts receivable, net $ $29,800$ $ $54,200$

Long$-$term notes payable $80,800101,000$ Merchandise inventory $55,600107,400$

Common stock, $$5$ par value $180,000206,000$ Total assets $398,000382,500$

Retained earnings $123,300142,150$ Common stock, $$5$ par value $180,000206,000$

Total liabilities and equity $ $445,440$ $ $542,450$ Retained earnings $98,30093,600$

Problem $13-5$A $($Static$)$ Part $1$

Required:

$1$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 $($f$)$ days' sales uncollected.

Note: Do not round intermediate calculations.

$1$b$.$ Identify the company you consider to be the better short$-$term credit risk.