Summary information from the financial statements of two com

Summary information from the financial statements of two companies competing in the same industry follows Kyan Kyan Barco Company Company Barco Company Company Data from the current year-end balance sheets Data from the current year\'s income statement $ 880,200 770,000 $ 585,100 7,900 Assets Sales 632,500 Cash Accounts receivable, net Current notes receivable (trade) Merchandise inventory Prepaid expenses Plant assets, net $ 19,500 34,000 Cost of goods sold 37,400 9,100 84,440 5,000 13,000 14,800 24,300 162,200 210,400 5.11 57,400 Interest expense 7,200 Income tax expense 132,500 Net income 6,950Basic earnings per share 4.51 304,400 290,000 Cash dividends per share 3.81 3.93 445,440 $ $ 542,450 lotal assets Liabilities and Equity Current liabilities Long-term notes payable Beginning-of-year balance sheet data Accounts receivable, net Current notes receivable (trade) $ 29,800 54,200 0 $ 61,340 $ 93,300 80,800 180,000 123,300 142,150 Common stock, $5 par value 0 55,600 398,000 101,000 Merchandise inventory 206,000 107,400 382,500 Common stock, $5 par value Total assets 206,000 Retained earnings 180,000 542,450 Retained earnings Total liabilities and equity $445,440 $ 98,300 93,600

Solution

current ratio

current assets

/

current liabilities

current ratio

Barco

155440

/

61340

2.534072

1

Kyan

238050

/

93300

2.551447

1

Acid test ratio

cash

+

Accounts receivables

+

notes receivables

/

current liabilities

ACID TEST RATIO

Barco

19500

+

37400

+

9100

/

61340

1.07597

Kyan

34000

+

57400

+

7200

/

93300

1.056806

Accounts receivable turnover ratio

sales

/

average accounts receivables

Accounts receivable turnover ratio

Barco

770000

/

33600

22.91667

Kyan

880200

/

55800

15.77419

Barco

average accounts receivables = (opening balance+closing balance)/2

(37400+29800)/2

33600

Kyan

average accounts receivables = (opening balance+closing balance)/2

(57400+54200)/2

55800

inventory turnover ratio

sales

/

average inventory

inventory turnover ratio

Barco

770000

/

70020

10.99686

Kyan

880200

/

119950

7.338058

Barco

average inventory = (opening balance+closing balance)/2

(84440+55600)/2

70020

Kyan

average inventory = (opening balance+closing balance)/2

(132500+107400)/2

119950

days sales in invetory

365

/

inventory turnover ratio

days sales in invetory

Barco

365

/

10.996858

33.1913

Kyan

365

/

7.33805752

49.74068

days sales uncollected

365

/

Accounts receivable turnover ratio

days sales uncollected

Barco

365

/

22.9166667

15.92727

Kyan

365

/

15.7741935

23.13906

Barco is at better short term credit risk as its day sales uncollected is 15.92 days

	current ratio
	current assets	/	current liabilities	current ratio
Barco	155440	/	61340	2.534072	1
Kyan	238050	/	93300	2.551447	1
	Acid test ratio
	cash	+	Accounts receivables	+	notes receivables	/	current liabilities	ACID TEST RATIO
Barco	19500	+	37400	+	9100	/	61340	1.07597
Kyan	34000	+	57400	+	7200	/	93300	1.056806
	Accounts receivable turnover ratio
	sales	/	average accounts receivables	Accounts receivable turnover ratio
Barco	770000	/	33600	22.91667
Kyan	880200	/	55800	15.77419
Barco	average accounts receivables = (opening balance+closing balance)/2	(37400+29800)/2	33600
Kyan	average accounts receivables = (opening balance+closing balance)/2	(57400+54200)/2	55800
	inventory turnover ratio
	sales	/	average inventory	inventory turnover ratio
Barco	770000	/	70020	10.99686
Kyan	880200	/	119950	7.338058
Barco	average inventory = (opening balance+closing balance)/2	(84440+55600)/2	70020
Kyan	average inventory = (opening balance+closing balance)/2	(132500+107400)/2	119950
	days sales in invetory
	365	/	inventory turnover ratio	days sales in invetory
Barco	365	/	10.996858	33.1913
Kyan	365	/	7.33805752	49.74068
	days sales uncollected
	365	/	Accounts receivable turnover ratio	days sales uncollected
Barco	365	/	22.9166667	15.92727
Kyan	365	/	15.7741935	23.13906
Barco is at better short term credit risk as its day sales uncollected is 15.92 days