rr Summary information from the financial statements of two companies competing in the same industry follows.BarcoCompanyBarcoCompanyData from the current year-endbalance sheetsAssetsCashAccounts receivable, netMerchandise inventoryPrepaid expensesPlant assets, netTotal assetsLiabilities and EquityCurrent liabilitiesLong-term notes payableCommon stock, $5 par valueRetained earningsTotal liabilities and equityProblem 13-5A (Static) Part 1BarcoKyan1A Current 1A Acid Test 1A Acct RecRatioRatioTurnFor both companies compute the acid-test ratio.(b)Company$ 19,50046,50084,4405,000290,000$ 445,440Cash$$KyanCompany19,500 + $34,000 +$$ 34,00064,600132,5006,950304,400$ 542,450$ 61,34080,800180,000123,300$ 445,440 $ 542,450$ 93,300101,000206,000142, 150Numerator:+ Short-term investmentsComplete this question by entering your answers in the tabs below.Data from the current year'sincome statementSalesCost of goods sold1A Invent 1A Days Sal inTurnoverInvInterest expenseIncome tax expenseNet incomeBasic earnings per shareCash dividends per shareBeginning-of-year balance sheetdataAccounts receivable, netMerchandise inventoryRequired:1a. 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.1b. Identify the company you consider to be the beTotal assetsCommon stock, $5 par valueRetained earningst-term credit risk.46,500 + $64,600 + $1A Days SalUncolAcid-Test RatioCurrent receivables1B short termDenominator:1 Current liabilities0 1 $0 1$$ 770,000 $ 880, 200585,1007,90014,800162,2004.513.81$ 29,80055,600398,000180,00098,300=61,340 =93,300KyanCompany=632,50013,00024,300210,4005.113.93= Acid-Test RatioAcid-test ratioto 1to 1$ 54,200107,400382,500206,00093,600

Acid Test Ratio - The acid-test ratio also called the quick ratio compares a company's “quick…

Summary information from the financial statements of two companies competing in the same industry follows. Barco Company Data from the current year-end balance sheets Assets Cash Accounts receivable, net Merchandise inventory 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 Problem 13-5A (Static) Part 1 Barco Kyan 1A Current 1A Acid Test 1A Acct Rec Ratio Ratio Turn For both companies compute the acid-test ratio. (b) Company Cash $ $ $ 19,500 46,500 84,440 5,000 290,000 6,950 304,400 $ 445,440 $ 542,450 + Kyan Company $ 61,340 80, 800 180,000 123,300 $ 93,300 101,000 206,000 142,150 $ 445,440 $ 542,450 Numerator: Short-term investments 19,500 + $ 34,000 + $ $ 34,000 64,600 132,500 Complete this question by entering your answers in the tabs below. + 46,500 + 64,600 Data from the current year's income statement Sales Cost of goods sold Interest expense Income tax expense Net income Basic earnings per share Cash dividends per share Beginning-of-year balance sheet data Accounts receivable, net Merchandise inventory Required: 1a. 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. 1b. Identify the company you consider to be the better short-term credit risk. 1A Invent 1A Days Sal in 1A Days Sal Turnover Inv Uncol Total assets Common stock, $5 par value Retained earnings $ $ Acid-Test Ratio Current receivables 1B short term 1 0 1 0 1 Denominator: Current liabilities $ $ 61,340 93,300 $ 770,000 585,100 7,900 14,800 162,200 4.51 3.81 Barco Company = = $ 29,800 55,600 = 398,000 180,000 98,300 Kyan Company $ 880, 200 632,500 13,000 24,300 210,400 5.11 3.93 = Acid-Test Ratio Acid-test ratio to 1 to 1 $ 54,200 107,400 382,500 206,000 93,600

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q