Required information Problem 13-5A Comparative ratio analysis LO A1, 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. Barco yan Company Barco yan Company Company Company Data from the current year-end balance sheets Data from the current year's income statement Sales $770,000 $880,200 585,100 7,900 14,800 162,200 4.51 Assets 632,500 13,000 24 300 210,400 4.11 19,500 $34,000 37,400 9,100 84,440 5,000 290,000 $445,440 $542,450 Cash Accounts receivable, net Current notes receivable (trade) Merchandise inventory Prepaid expenses Plant assets, net Cost of goods sold Interest expense Income tax expense 57,400 7,200 132,500 6,950 304,400 Net income Basic earnings per share Cash dividends per share 3.81 3.93 Total assets Beginning-of - year balance sheet data Accounts receivable, net Current notes receivable (trade) Merchandise inventory 29,800 $54 200 Liabilities and Equity Current liabilities 61,340 93,300 101,000 206,000 142,150 107,400 382,500 206 000 Long-term notes payable Common stock, $5 par value Retained earnings 80,800 180,000 55,600 398,000 180,000 Total assets 123,300 $445,440 $542,450 Common stock, $5 par value Retained earnings Total liabilities and equity 98,300 93,600 Problem 13-5A Part 1 Required: 1a. For both companies compute the (a) current ratio, (b) acid-test ratio, (c) accounts (including notes) receivable turnover, (d) inventory turnover, (e) days' sales in inventory, and (j days' sales uncollected. (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. 1A Acid Test 1A Invent 1A Days Sal Uncol 1A Current 1A Acct Rec 1A Days Sal in 1B short term Ratio Ratio Turn Turnover Inv For both companies compute the current ratio. Current Ratio (a) Company Choose Numerator: Choose Denominator: Current Ratio Current ratio Barco to 1 |yan to 1 1A Current Ratio 1A Acid Test Ratio 1A Acid Test 1A Acct Rec 1A Days Sal Uncol 1A Current 1A Invent 1A Days Sal in 1B short term Turnover Ratio Ratio Turn Inv For both companies compute the acid-test ratio. Acid-Test Ratio b Company Choose Numerator: Choose Denominator: Acid-Test Ratio = / Acid-test ratio + = to 1 Barco | yan / to 1 = 1A Current Ratio 1A Acct Rec Turn + 1A Acid Test 1A Invent 1A Days Sal in Inv 1A Days Sal Uncol 1A Current 1A Acct Rec 1B short term Ratio Ratio Turn Turnover For both companies compute the accounts (including notes) receivable turnover. Accounts Receivable Turnover (c) Company Choose Numerator: Choose Denominator: Accounts Receivable Turnover = / Accounts receivable turnover times Barco / times yan K1A Acid Test Ratio 1A Invent Turnover 1A Days Sal in 1A Acid Test 1A Days Sal Uncol 1A Current 1A Acct Rec 1A Invent 1B short term Ratio Ratio Turn Turnover Inv For both companies compute the inventory turnover. Inventory Turnover (d) Choose Numerator: Inventory Turnover Company Choose Denominator: / Inventory turnover Barco |yan times / times / 1A Acct Rec Turn 1A Days Sal in Inv II 1A Days Sal in 1A Acid Test 1A Acct Rec 1A Days Sal Uncol 1A Current 1A Invent 1B short term Ratio Ratio Turn Turnover Inv For both companies compute the days' sales in inventory. Days' Sales in Inventory Choose Denominator: (e) Choose Numerator: Days' Sales in Inventory Company Days x Days' sales in inventory X days days Barco X |yan / X 1A Days Sal Uncol 1A Invent Turnover II 1A Days Sal in 1A Acid Test 1A Days Sal Uncol 1A Current 1A Acct Rec 1A Invent 1B short term Ratio Ratio Turn Turnover Inv For both companies compute the days' sales uncollected. Days' Sales Uncollected (f) Company Choose Numerator: Choose Denominator: Days Days' Sales Uncollected Days' sales uncollected days Barco / yan / days X 1A Days Sal in Inv 1B short term 1A Days Sal Uncol 1A Acid Test 1A Acct Rec 1A Days Sal in Inv 1A Current 1A Invent 1B short term Ratio Ratio Turn Turnover Identify the company you consider to be the better short-term credit risk. Better short-term credit risk 1A Days Sal Uncol 1B short term