Required information

Problem $17-2$A $($Algo$)$ Ratios, common$-$size statements, and trend percents LO P$1,$ P$2,$ P$3$

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$[$The following information applies to the questions displayed below.$]$

Selected comparative financial statements of Korbin Company follow.

KORBIN COMPANYComparative Income StatementsFor Years Ended December $31202120202019$Sales$ $536,273$$ $410,829$$ $285,100$Cost of goods sold$322,836260,055182,464$Gross profit$213,437150,774102,636$Selling expenses$76,15156,69437,633$Administrative expenses$48,26536,15323,663$Total expenses$124,41692,84761,296$Income before taxes$89,02157,92741,340$Income tax expense$16,55811,8758,392$Net income$ $72,463$$ $46,052$$ $32,948$

KORBIN COMPANYComparative Balance SheetsDecember $31202120202019$Assets$$Current assets$ $57,891$$ $38,747$$ $51,795$Long$-$term investments$01,2004,640$Plant assets, net$104,27094,75955,169$Total assets$ $162,161$$ $134,706$$ $111,604$Liabilities and Equity$$Current liabilities$ $23,676$$ $20,071$$ $19,531$Common stock$72,00072,00054,000$Other paid$-$in capital$9,0009,0006,000$Retained earnings$57,48533,63532,073$Total liabilities and equity$ $162,161$$ $134,706$$ $111,604$

Problem $17-2$A $($Algo$)$ Part $4$

$4.$ Refer to the results from parts $1,2,$ and $3.$

$($a$)$ Did cost of goods sold make up a greater portion of sales for the most recent year compared to the prior year?

multiple choice $1$

Yes

No

$($b$)$ Did income as a percent of sales improve in the most recent year compared to the prior year?

multiple choice $2$

Yes

No

$($c$)$ Did plant assets grow over this period?

multiple choice $3$

Yes

NoRequired information

Problem $17-5$A $($Algo$)$ Comparative ratio analysis LO P$3$

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$[$The following information applies to the questions displayed below.$]$

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

$$Barco CompanyKyan Company$$Barco CompanyKyan CompanyData from the current year$-$end balance sheets$$Data from the current year$$s income statement$$Assets$$Sales$ $800,000$$ $902,200$Cash$ $19,500$$ $34,000$Cost of goods sold$592,100642,500$Accounts receivable, net$36,40059,400$Interest expense$8,70018,000$Merchandise inventory$84,840132,500$Income tax expense$15,37724,907$Prepaid expenses$5,9007,450$Net income$183,823216,793$Plant assets, net$310,000311,400$Basic earnings per share$5\mathrm{.}115\mathrm{.}02$Total assets$ $456,640$$ $544,750$Cash dividends per share$3\mathrm{.}723\mathrm{.}96$Liabilities and Equity$$Beginning$-$of$-$year balance sheet data$$Current liabilities$ $69,340$$ $100,300$Accounts receivable, net$ $27,800$$ $54,200$Long$-$term notes payable$83,800103,000$Merchandise inventory$63,600109,400$Common stock, $$5$ par value$180,000216,000$Total assets$448,000412,500$Retained earnings$123,500125,450$Common stock, $$5$ par value$180,000216,000$Total liabilities and equity$ $456,640$$ $544,750$Retained earnings$73,59779,729$

Problem $17-5$A $($Algo$)$ 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.