Problem 13-5A (Static) Comparative ratio analysis LO P3 [The following information applies to the questions displayed...

Transcribed Image Text:

Problem 13-5A (Static) Comparative ratio analysis LO P3 [The following information applies to the questions displayed below.] Summary information from the financial statements of two companies competing in the same industry follows. Sales Cost of goods sold Barco Company Kyan Company Barco Company Data from the current year-end balance sheets Data from the current year's income statement Assets Cash $ 19,500 $34,000 $ 770,000 585,100 Accounts receivable, net 46,500 64,600 Interest expense 7,900 Merchandise inventory 84,440 132,500 14,800 Net income 162,200 4.51 3.81 Prepaid expenses Plant assets, net Total assets Liabilities and Equity Current liabilities Long-term notes payable Common stock, $5 par value 5,000 6,950 290,000 304,400 $ 445,440 $ 542,450 Income tax expense Basic earnings per share. Cash dividends per share Beginning-of-year balance sheet Accounts receivable, net Merchandise inventory data $ 61,340 80,800 180,000 $93,300 101,000 206,000 $ 29,800 55,600 Total assets 398,000 123,300 142,150 Total liabilities and equity $445,440 $ 542,450 Common stock, $5 par value Retained earnings 180,000 98,300 Retained earnings Problem 13-5A (Static) Part 1 Required: 1a. 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 (1) days' sales uncollected. Note: Do not round intermediate calculations. 1b. Identify the company you consider to be the better short-term credit risk. Complete this question by entering your answers in the tabs below. Complete this question by entering your answers in the tabs below. 1A Current 1A Acid Test Ratio Ratio 1A Acct Rec Turn 1A Invent 1A Days Sal in 1A Days Sal Turnover 1B short term Uncol For both companies compute the current ratio. (a) Company Numerator: Current assets Barco Kyan Current Ratio Denominator: Current Ratio Current liabilities Current ratio $ / $ 61,340= 93,300 to 1 to 1 <1A Current Ratio 1A Acid Test Ratio > Problem 13-5A (Static) Comparative ratio analysis LO P3 [The following information applies to the questions displayed below.] Summary information from the financial statements of two companies competing in the same industry follows. Sales Cost of goods sold Barco Company Kyan Company Barco Company Data from the current year-end balance sheets Data from the current year's income statement Assets Cash $ 19,500 $34,000 $ 770,000 585,100 Accounts receivable, net 46,500 64,600 Interest expense 7,900 Merchandise inventory 84,440 132,500 14,800 Net income 162,200 4.51 3.81 Prepaid expenses Plant assets, net Total assets Liabilities and Equity Current liabilities Long-term notes payable Common stock, $5 par value 5,000 6,950 290,000 304,400 $ 445,440 $ 542,450 Income tax expense Basic earnings per share. Cash dividends per share Beginning-of-year balance sheet Accounts receivable, net Merchandise inventory data $ 61,340 80,800 180,000 $93,300 101,000 206,000 $ 29,800 55,600 Total assets 398,000 123,300 142,150 Total liabilities and equity $445,440 $ 542,450 Common stock, $5 par value Retained earnings 180,000 98,300 Retained earnings Problem 13-5A (Static) Part 1 Required: 1a. 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 (1) days' sales uncollected. Note: Do not round intermediate calculations. 1b. Identify the company you consider to be the better short-term credit risk. Complete this question by entering your answers in the tabs below. Complete this question by entering your answers in the tabs below. 1A Current 1A Acid Test Ratio Ratio 1A Acct Rec Turn 1A Invent 1A Days Sal in 1A Days Sal Turnover 1B short term Uncol For both companies compute the current ratio. (a) Company Numerator: Current assets Barco Kyan Current Ratio Denominator: Current Ratio Current liabilities Current ratio $ / $ 61,340= 93,300 to 1 to 1 <1A Current Ratio 1A Acid Test Ratio >