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Carson Electronics’ management has long viewed BGT Electronics as an industry leader and uses this firm as a model firm for analyzing its own performance. The balance sheet and income statements for the two firms are as follows: Calculate the following ratios for both Carson and BGT:       a) Current ratio:       b) Times interest earned:        c) Inventory turnover:

Carson Electronics’ management has long viewed BGT Electronics as an industry leader and uses this firm as a model firm for analyzing its own performance. The balance sheet and income statements for the two firms are as follows: Calculate the following ratios for both Carson and BGT:       a) Current ratio:       b) Times interest earned:        c) Inventory turnover:

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Carson Electronics’ management has long viewed BGT Electronics as an industry leader and uses this firm as a model firm for analyzing its own performance. The balance sheet and income statements for the two firms are as follows:

  1. Calculate the following ratios for both Carson and BGT:

      a) Current ratio:

      b) Times interest earned: 

      c) Inventory turnover:

Carson Electronics, Inc. Balance Sheet ($000) BGT Electronics, Inc. Balance Sheet ($000) Cash Accounts receivable Inventories Current assets Net fixed assets Total assets $ 2,000 4,500 1,500 $ 8,000 16,000 $24,000 $ 1,500 6,000 2,500 $10,000 25,000 $35,000 Accounts payable Accrued expenses Short-term notes payable Current liabilities $ 2,500 1,000 3,500 $ 7,000 8,000 9,000 $24,000 $ 5,000 1,500 1,500 $ 8,000 4,000 23,000 $35,000 Long-term debt Owners' equity Total liabilities and owners' equity Carson Electronics, Inc. Income Statement ($000) BGT Electronics, Inc. Income Statement ($000) Net sales (all credit) Cost of goods sold Gross profit Operating expenses Net operating income Interest expense Earnings before taxes Income taxes (40%) $48,000 (36,000) $12,000 (8,000) $ 4,000 (1,150) 2,850 (1,140) $ 1,710 $70,000 (42,000) $28,000 (12,000) $16,000 (550) 15,450 (6,180) $ 9,270 Net income
Transcribed Image Text:Carson Electronics, Inc. Balance Sheet ($000) BGT Electronics, Inc. Balance Sheet ($000) Cash Accounts receivable Inventories Current assets Net fixed assets Total assets $ 2,000 4,500 1,500 $ 8,000 16,000 $24,000 $ 1,500 6,000 2,500 $10,000 25,000 $35,000 Accounts payable Accrued expenses Short-term notes payable Current liabilities $ 2,500 1,000 3,500 $ 7,000 8,000 9,000 $24,000 $ 5,000 1,500 1,500 $ 8,000 4,000 23,000 $35,000 Long-term debt Owners' equity Total liabilities and owners' equity Carson Electronics, Inc. Income Statement ($000) BGT Electronics, Inc. Income Statement ($000) Net sales (all credit) Cost of goods sold Gross profit Operating expenses Net operating income Interest expense Earnings before taxes Income taxes (40%) $48,000 (36,000) $12,000 (8,000) $ 4,000 (1,150) 2,850 (1,140) $ 1,710 $70,000 (42,000) $28,000 (12,000) $16,000 (550) 15,450 (6,180) $ 9,270 Net income
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