Required:la. 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. (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 Acct RecRatio1A Invent 1A Days Sal in 1A Days SalTurnover1A Current1B short termRatioTurnInvUncolFor both companies compute the acid-test ratio.(b)Acid-Test Ratio= Acid-Test RatioCompanyCashChoose Numerator:Choose Denominator:Short-term investmentsCurrent receivablesI Current liabilitiesAcid-test ratio++=19,500 +61,34093,300Barco$+to 1Кyan$34,000to 1++=< 1A Current Ratio1A Acct Rec Turn > Summary information from the financial statements of two companies competing in the same industry follows.BarcoCompanyData from the current year-end balance sheetsКyanCompanyBarcoКyanCompanyCompanyData from the current year's income statementSalesCost of goods soldInterest expenseIncome tax expenseNet income$770,000 $880,200632,50013,00024,300210,4005.11AssetsCashAccounts receivable, netMerchandise inventoryPrepaid expensesPlant assets, net$ 19,500 $ 34,00046,50084,4405,000290, 000585,1007,90064,600132,5006,950304,40014,800162,2004.51Basic earnings per shareTotal assets$445,440 $542,450Cash dividends per share3.813.93Liabilities and EquityCurrent liabilitiesLong-term notes payableCommon stock, $5 par valueRetained earningsBeginning-of-year balance sheet dataAccounts receivable, netMerchandise inventoryTotal assets$ 61,340 $ 93,30055,600398,000180,000$ 29,800 $ 54,200107,400382,500206,00093,60080,800180,000123,300101,000206,000142,150Common stock, $5 par valueTotal liabilities and equity$445,440 $542,450Retained earnings98,300

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Answered: Required: 1a. For both companies…

Required: 1a. For both companies compute the (a) current ratio, (b) acid-test ratio, (c) accounts receivable turnover, (

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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