Required: 18. For both companies compute the (a) current ratio, (b) acid-test ratio, (c) accounts receivable...

 

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Required: 18. 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 ( days' sales uncollected. Note: Do not round Intermediate calculations. 1b. Identify the company you consider to be the better short-term credit risk. Required Information [The following Information applies to the questions displayed below.] 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 Data from the current year's balance sheets income statement Assets Sales $770,000 $880,200 Cash Accounts receivable, net $ 19,500 46,500 $ 34,000 Cost of goods sold 585,100 632,500 64,600 Merchandise inventory 84,440 Prepaid expenses Plant assets, net Total assets Liabilities and Equity Current liabilities Long-term notes payable Common stock, $5 par value Retained earnings Total liabilities and equity 80,800 180,000 123,300 $ 445,440 $ 542,450 5,000 290,000 132,500 6,950 Interest expense Income tax expense Net income 7,900 13,000 14,800 24,300 162,200 210,400 304,400 Basic earnings per share 4.51 5.11 $ 445,440 $ 542,450 Cash dividends per share 3.81 3.93 Beginning-of-year balance sheet data $ 61,340 $ 93,300 Accounts receivable, net 101,000 Merchandise inventory 206,000 Total assets 142,150 Common stock, $5 par value Retained earnings $ 29,800 $ 54,200 55,600 107,400 398,000 382,500 180,000 206,000 98,300 93,600 1A Current 1A Acid Test 1A Acct Rec Ratio Turn Ratio 1A Invent 1A Days Sal in 1A Days Sal 1B short term Turnover For both companies compute the inventory turnover. Inv Uncol (d) Company Numerator: Barco Kyan Inventory Turnover Denominator: Inventory Turnover = Inventory turnover 0 times 0 times 1A Current Ratio 1A Acid Test 1A Acct Rec Ratio Turn 1A Invent 1A Days Sal in 1A Days Sal Turnover Inv Uncol 1B short term For both companies compute the days' sales in inventory. (e) Company Barco Kyan Numerator: - Days' Sales in Inventory. Denominator: x Days Days' Sales in Inventory x = Days' sales in inventory x = 0 days = 0 days 2A Prof Mar Ratio 2A Tot Asset 2A Ret on Tot Turn Assets 2A Ret On Equity 2A Price Earn Ratio 2A Div Yield Req 28 For both companies compute the return on total assets. (c) Company Numerator: Barco Kyan 1 Return on Total Assets Denominator: Return on Total Assets = Return on total assets = % = % 2A Prof Mar Ratio Turn 2A Tot Asset 2A Ret on Tot Assets 2A Ret On Equity 2A Price Earn Ratio 2A Div Yield Req 28 For both companies compute the return on equity. (d) Company Barco Kyan Numerator: Return On Equity. Denominator Return On Equity Return on equity % % 2A Prof Mar Ratio 2A Tot Asset 2A Ret on Tot Turn Assets 2A Ret On Equity 2A Price Earn Ratio 2A Div Yield Req 2B Assuming that share and each company's stock can be purchased at $75 per share, compute their price-earnings ratios. (e) Company Barco Kyan Numerator: I 1 Price-Earnings Ratio Denominator: = Price-Earnings Ratio = Price-Earnings Ratio = times = times 2A Prof Mar 2A Tot Asset Ratio Turn 2A Ret on Tot Assets 2A Ret On 2A Price Earn Equity Ratio 2A Div Yield Req 2B Assuming that each company's stock can be purchased at $75 per share, compute their dividend yields. (f) Company Barco Kyan Numerator: 1 Dividend Yield Denominator: Dividend Yield = Dividend Yield = % Turn 2A Prof Mar 2A Tot Asset 2A Ret on Tot Ratio Assets 2A Ret On 2A Price Earn Equity Ratio 2A Div Yield Req 2B Identify which company's stock you would recommend as the better investment. The better investment 1A Current 1A Acid Test Ratio Ratio 1A Acct Rec Turn 1A Invent Turnover 1A Days Sal in 1A Days Sal Inv Uncol 1B short term For both companies compute the acid-test ratio. (b) Company Numerator: Barco + Kyan + + Acid-Test Ratio 1 1 Denominator: = Acid-Test Ratio = Acid-test ratio = 0 to 1 = 0 to 1 1A Current 1A Acid Test Ratio Ratio 1A Acct Rec Turn 1A Invent 1A Days Sal in 1A Days Sal Turnover Inv Uncol 1B short term = Accounts Receivable Turnover = Accounts receivable turnover = 0 times = 0 times For both companies compute the accounts (including notes) receivable turnover. (c) Company Numerator: Accounts Receivable Turnover Denominator: Barco Kyan - Inv 1A Invent 1A Days Sal in 1A Days Sal Turnover 1B short term Uncol 1A Current 1A Acid Test 1A Acct Rec Ratio Ratio Turn For both companies compute the days' sales uncollected. (f) Company Barco Kyan Numerator: 1 Days' Sales Uncollected Denominator: x Days = Days' Sales Uncollected x = x = x = Days' sales uncollected 0 days 0 days 1A Current Ratio 1A Acid Test Ratio 1A Acct Rec Turn 1A Invent Turnover 1A Days Sal in Inv 1A Days Sal Uncol 1B short term Identify the company you consider to be the better short-term credit risk. Better short-term credit risk 2A Prof Mar Ratio 2A Tot Asset 2A Ret on Tot 2A Ret On Turn Assets Equity 2A Price Earn Ratio 2A Div Yield Req 2B For both companies compute the profit margin ratio. (a) Company Numerator: Profit Margin Ratio Denominator: Barco Kyan 1 = = Profit margin ratio Profit margin ratio % % 2A Prof Mar Ratio 2A Tot Asset 2A Ret on Tot Turn Assets 2A Ret On Equity 2A Price Earn Ratio 2A Div Yield Req 2B For both companies compute the total asset turnover (b) Company Barco Kyan Numerator: Total Asset Turnover Denominator: Total Asset Turnover = Total asset turnover times times Required: 18. 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 ( days' sales uncollected. Note: Do not round Intermediate calculations. 1b. Identify the company you consider to be the better short-term credit risk. Required Information [The following Information applies to the questions displayed below.] 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 Data from the current year's balance sheets income statement Assets Sales $770,000 $880,200 Cash Accounts receivable, net $ 19,500 46,500 $ 34,000 Cost of goods sold 585,100 632,500 64,600 Merchandise inventory 84,440 Prepaid expenses Plant assets, net Total assets Liabilities and Equity Current liabilities Long-term notes payable Common stock, $5 par value Retained earnings Total liabilities and equity 80,800 180,000 123,300 $ 445,440 $ 542,450 5,000 290,000 132,500 6,950 Interest expense Income tax expense Net income 7,900 13,000 14,800 24,300 162,200 210,400 304,400 Basic earnings per share 4.51 5.11 $ 445,440 $ 542,450 Cash dividends per share 3.81 3.93 Beginning-of-year balance sheet data $ 61,340 $ 93,300 Accounts receivable, net 101,000 Merchandise inventory 206,000 Total assets 142,150 Common stock, $5 par value Retained earnings $ 29,800 $ 54,200 55,600 107,400 398,000 382,500 180,000 206,000 98,300 93,600 1A Current 1A Acid Test 1A Acct Rec Ratio Turn Ratio 1A Invent 1A Days Sal in 1A Days Sal 1B short term Turnover For both companies compute the inventory turnover. Inv Uncol (d) Company Numerator: Barco Kyan Inventory Turnover Denominator: Inventory Turnover = Inventory turnover 0 times 0 times 1A Current Ratio 1A Acid Test 1A Acct Rec Ratio Turn 1A Invent 1A Days Sal in 1A Days Sal Turnover Inv Uncol 1B short term For both companies compute the days' sales in inventory. (e) Company Barco Kyan Numerator: - Days' Sales in Inventory. Denominator: x Days Days' Sales in Inventory x = Days' sales in inventory x = 0 days = 0 days 2A Prof Mar Ratio 2A Tot Asset 2A Ret on Tot Turn Assets 2A Ret On Equity 2A Price Earn Ratio 2A Div Yield Req 28 For both companies compute the return on total assets. (c) Company Numerator: Barco Kyan 1 Return on Total Assets Denominator: Return on Total Assets = Return on total assets = % = % 2A Prof Mar Ratio Turn 2A Tot Asset 2A Ret on Tot Assets 2A Ret On Equity 2A Price Earn Ratio 2A Div Yield Req 28 For both companies compute the return on equity. (d) Company Barco Kyan Numerator: Return On Equity. Denominator Return On Equity Return on equity % % 2A Prof Mar Ratio 2A Tot Asset 2A Ret on Tot Turn Assets 2A Ret On Equity 2A Price Earn Ratio 2A Div Yield Req 2B Assuming that share and each company's stock can be purchased at $75 per share, compute their price-earnings ratios. (e) Company Barco Kyan Numerator: I 1 Price-Earnings Ratio Denominator: = Price-Earnings Ratio = Price-Earnings Ratio = times = times 2A Prof Mar 2A Tot Asset Ratio Turn 2A Ret on Tot Assets 2A Ret On 2A Price Earn Equity Ratio 2A Div Yield Req 2B Assuming that each company's stock can be purchased at $75 per share, compute their dividend yields. (f) Company Barco Kyan Numerator: 1 Dividend Yield Denominator: Dividend Yield = Dividend Yield = % Turn 2A Prof Mar 2A Tot Asset 2A Ret on Tot Ratio Assets 2A Ret On 2A Price Earn Equity Ratio 2A Div Yield Req 2B Identify which company's stock you would recommend as the better investment. The better investment 1A Current 1A Acid Test Ratio Ratio 1A Acct Rec Turn 1A Invent Turnover 1A Days Sal in 1A Days Sal Inv Uncol 1B short term For both companies compute the acid-test ratio. (b) Company Numerator: Barco + Kyan + + Acid-Test Ratio 1 1 Denominator: = Acid-Test Ratio = Acid-test ratio = 0 to 1 = 0 to 1 1A Current 1A Acid Test Ratio Ratio 1A Acct Rec Turn 1A Invent 1A Days Sal in 1A Days Sal Turnover Inv Uncol 1B short term = Accounts Receivable Turnover = Accounts receivable turnover = 0 times = 0 times For both companies compute the accounts (including notes) receivable turnover. (c) Company Numerator: Accounts Receivable Turnover Denominator: Barco Kyan - Inv 1A Invent 1A Days Sal in 1A Days Sal Turnover 1B short term Uncol 1A Current 1A Acid Test 1A Acct Rec Ratio Ratio Turn For both companies compute the days' sales uncollected. (f) Company Barco Kyan Numerator: 1 Days' Sales Uncollected Denominator: x Days = Days' Sales Uncollected x = x = x = Days' sales uncollected 0 days 0 days 1A Current Ratio 1A Acid Test Ratio 1A Acct Rec Turn 1A Invent Turnover 1A Days Sal in Inv 1A Days Sal Uncol 1B short term Identify the company you consider to be the better short-term credit risk. Better short-term credit risk 2A Prof Mar Ratio 2A Tot Asset 2A Ret on Tot 2A Ret On Turn Assets Equity 2A Price Earn Ratio 2A Div Yield Req 2B For both companies compute the profit margin ratio. (a) Company Numerator: Profit Margin Ratio Denominator: Barco Kyan 1 = = Profit margin ratio Profit margin ratio % % 2A Prof Mar Ratio 2A Tot Asset 2A Ret on Tot Turn Assets 2A Ret On Equity 2A Price Earn Ratio 2A Div Yield Req 2B For both companies compute the total asset turnover (b) Company Barco Kyan Numerator: Total Asset Turnover Denominator: Total Asset Turnover = Total asset turnover times times