Summary information from the financial statements of two companies competing in the same industry follows. Barco Company Kyan Company Barco Company Kyan Company Data from the current year-end balance sheets Data from the current year’s income statement Assets Sales $ 770,000 $ 895,200 Cash $ 18,500 $ 33,000 Cost of goods sold 593,100 642,500 Accounts receivable, net 40,400 51,400 Interest expense 8,300 16,000 Merchandise inventory 84,940 128,500 Income tax expense 14,800 24,714 Prepaid expenses 5,500 7,550 Net income 153,800 211,986 Plant assets, net 310,000 312,400 Basic earnings per share 4.52 4.91 Total assets $ 459,340 $ 532,850 Cash dividends per share 3.74 3.92 Liabilities and Equity Beginning-of-year balance sheet data Current liabilities $ 64,340 $ 98,300 Accounts receivable, net $ 30,800 $ 51,200 Long-term notes payable 79,800 109,000 Merchandise inventory 63,600 105,400 Common stock, $5 par value 170,000 216,000 Total assets 398,000 382,500 Retained earnings 145,200 109,550 Common stock, $5 par value 170,000 216,000 Total liabilities and equity $ 459,340 $ 532,850 Retained earnings 118,560 66,908 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

See similar textbooks

Related questions

Question

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

	Barco Company	Kyan Company		Barco Company	Kyan Company
Data from the current year-end balance sheets			Data from the current year’s income statement
Assets			Sales	$ 770,000	$ 895,200
Cash	$ 18,500	$ 33,000	Cost of goods sold	593,100	642,500
Accounts receivable, net	40,400	51,400	Interest expense	8,300	16,000
Merchandise inventory	84,940	128,500	Income tax expense	14,800	24,714
Prepaid expenses	5,500	7,550	Net income	153,800	211,986
Plant assets, net	310,000	312,400	Basic earnings per share	4.52	4.91
Total assets	$ 459,340	$ 532,850	Cash dividends per share	3.74	3.92
Liabilities and Equity			Beginning-of-year balance sheet data
Current liabilities	$ 64,340	$ 98,300	Accounts receivable, net	$ 30,800	$ 51,200
Long-term notes payable	79,800	109,000	Merchandise inventory	63,600	105,400
Common stock, $5 par value	170,000	216,000	Total assets	398,000	382,500
Retained earnings	145,200	109,550	Common stock, $5 par value	170,000	216,000
Total liabilities and equity	$ 459,340	$ 532,850	Retained earnings	118,560	66,908

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.

1b. Identify the company you consider to be the better short-term credit risk.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions