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the inancial State 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 Barco Company two companies Kyan Company euing in the same indu try follows. $ 61,340 $ 94,300 82,800 180,000 181,700 101,000 236,000 96,250 $ 505,840 $ 527,550 Data from the current year's income statement Sales Cost of goods sold $ 19,500 $ 32,000 36,400 Interest expense 51,400 132,500 84,640 Income tax expense Net income 5,300 7,250 360,000 304,400 Basic earnings per share $ 505,840 $ 527,550 Cash dividends per share Beginning-of-year balance sheet data Accounts receivable, net Merchandise inventory Total assets Common stock, $5 par value Retained earnings Barco Company $ 780,000 590,100 8,900 14,992 166,008 4.61 3.81 $ 27,800 55,600 438,000 180,000 152,852 Kyan Company $ 924,200 638,500 12,000 25,514 248,180 5.26 3.9 $ 57,200 109,400 362,500 236,000 35,448

the inancial State 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 Barco Company two companies Kyan Company euing in the same indu try follows. $ 61,340 $ 94,300 82,800 180,000 181,700 101,000 236,000 96,250 $ 505,840 $ 527,550 Data from the current year's income statement Sales Cost of goods sold $ 19,500 $ 32,000 36,400 Interest expense 51,400 132,500 84,640 Income tax expense Net income 5,300 7,250 360,000 304,400 Basic earnings per share $ 505,840 $ 527,550 Cash dividends per share Beginning-of-year balance sheet data Accounts receivable, net Merchandise inventory Total assets Common stock, $5 par value Retained earnings Barco Company $ 780,000 590,100 8,900 14,992 166,008 4.61 3.81 $ 27,800 55,600 438,000 180,000 152,852 Kyan Company $ 924,200 638,500 12,000 25,514 248,180 5.26 3.9 $ 57,200 109,400 362,500 236,000 35,448

Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter12: Fainancial Statement Analysis
Section: Chapter Questions
Problem 92PSA: A Preparation of Ratios Refer to the financial statements for Burch Industries in Problem 12-89A and...
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Required information [The following information applies to the questions displayed below.] Summary information from the financial statements of two companies competing in the same industry follows. 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 Barco Company Kyan Company $ 19,500 36,400 84,640 5,300 360,000 $ 32,000 51,400 132,500 7,250 304,400 $ 505,840 $ 527,550 $ 61,340 $ 94,300 82,800 101,000 180,000 236,000 181,700 96,250 $ 505,840 $ 527,550 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 Total assets Common stock, $5 par value Retained earnings Barco Company $ 780,000 590, 100 8,900 14,992 166,008 4.61 3.81 $ 27,800 55,600 438,000 180,000 152,852 Kyan Company $ 924,200 638,500 12,000 25,514 248,186 5.26 3.97 $ 57,200 109,400 362,500 236,000 35,448
Transcribed Image Text:Required information [The following information applies to the questions displayed below.] Summary information from the financial statements of two companies competing in the same industry follows. 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 Barco Company Kyan Company $ 19,500 36,400 84,640 5,300 360,000 $ 32,000 51,400 132,500 7,250 304,400 $ 505,840 $ 527,550 $ 61,340 $ 94,300 82,800 101,000 180,000 236,000 181,700 96,250 $ 505,840 $ 527,550 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 Total assets Common stock, $5 par value Retained earnings Barco Company $ 780,000 590, 100 8,900 14,992 166,008 4.61 3.81 $ 27,800 55,600 438,000 180,000 152,852 Kyan Company $ 924,200 638,500 12,000 25,514 248,186 5.26 3.97 $ 57,200 109,400 362,500 236,000 35,448
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. Complete this question by entering your answers in the tabs below. 1A Current 1A Acid Test 1A Acct Rec Ratio Ratio Turn For both companies compute the current ratio. (a) Company Barco Kyan Numerator: 1 1 1 1 1A Invent 1A Days Sal in Turnover Inv Current Ratio Denominator: < 1A Current Ratio 1A Days Sal Uncol = = 1B short term Current Ratio Current ratio to 1 to 1 1A Acid Test Ratio >
Transcribed Image Text: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. Complete this question by entering your answers in the tabs below. 1A Current 1A Acid Test 1A Acct Rec Ratio Ratio Turn For both companies compute the current ratio. (a) Company Barco Kyan Numerator: 1 1 1 1 1A Invent 1A Days Sal in Turnover Inv Current Ratio Denominator: < 1A Current Ratio 1A Days Sal Uncol = = 1B short term Current Ratio Current ratio to 1 to 1 1A Acid Test Ratio >
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Summary information from the financial statements of two companies competing in the same industry follows. Kyan Company 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 Barco Company $ 19,500 $ 32,000 36,400 84,640 51,400 132,500 5,300 7,250 360,000 304,400 $ 505,840 $ 527,550 $ 61,340 $ 94,300 101,000 236,000 96,250 82,800 180,000 181,700 $ 505,840 $ 527,550 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 Total assets Common stock, $5 par value Retained earnings $ 780,000 590, 100 8,900 14,992 166,008 4.61 3.81 Kyan Company $ 924,200 638,500 12,000 25,514 248,186 5.26 3.97 $ 27,800 $ 57,200 55,600 109,400 438,000 362,500 180,000 236,000 152,852 35,448
Transcribed Image Text:Summary information from the financial statements of two companies competing in the same industry follows. Kyan Company 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 Barco Company $ 19,500 $ 32,000 36,400 84,640 51,400 132,500 5,300 7,250 360,000 304,400 $ 505,840 $ 527,550 $ 61,340 $ 94,300 101,000 236,000 96,250 82,800 180,000 181,700 $ 505,840 $ 527,550 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 Total assets Common stock, $5 par value Retained earnings $ 780,000 590, 100 8,900 14,992 166,008 4.61 3.81 Kyan Company $ 924,200 638,500 12,000 25,514 248,186 5.26 3.97 $ 27,800 $ 57,200 55,600 109,400 438,000 362,500 180,000 236,000 152,852 35,448
2a. For both companies compute the (a) profit margin ratio, (b) total asset turnover, (c) return on total assets, and (d) return on equity. Assuming that each company's stock can be purchased at $90 per share, compute their (e) price-earnings ratios and (f) dividend yields. 2b. Identify which company's stock you would recommend as the better investment. Complete this question by entering your answers in the tabs below. 2A Prof Mar 2A Tot Asset 2A Ret on Tot 2A Ret On 2A Price Earn Ratio Turn Assets Equity Ratio For both companies compute the profit margin ratio. Profit Margin Ratio Denominator: (a) Company Barco Kyan Numerator: 1 / < 2A Prof Mar Ratio = = = = 2A Div Yield Profit margin ratio Profit margin ratio 0% 0% 2A Tot Asset Turn > Req 2B
Transcribed Image Text:2a. For both companies compute the (a) profit margin ratio, (b) total asset turnover, (c) return on total assets, and (d) return on equity. Assuming that each company's stock can be purchased at $90 per share, compute their (e) price-earnings ratios and (f) dividend yields. 2b. Identify which company's stock you would recommend as the better investment. Complete this question by entering your answers in the tabs below. 2A Prof Mar 2A Tot Asset 2A Ret on Tot 2A Ret On 2A Price Earn Ratio Turn Assets Equity Ratio For both companies compute the profit margin ratio. Profit Margin Ratio Denominator: (a) Company Barco Kyan Numerator: 1 / < 2A Prof Mar Ratio = = = = 2A Div Yield Profit margin ratio Profit margin ratio 0% 0% 2A Tot Asset Turn > Req 2B
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