Summary information from the financial statements of two companies competing in

Question

Summary information from the financial statements of two companies competing in the same industry follows. Barco CompanyCompany Kyan Barco Kyan Company Company Data from the current year-end balance sheets Assets Cash Accounts receivable, net Current notes receivable (trade) Merchandise inventory Prepaid expenses Plant assets, net Total assets Data from the current year's income statement Sales $760,000 $892,200 596,100 646,500 7,900 17,000 14,608 24631 141,392 204,069 32 3.95 $ 19,000 38,000 Cost of goods solod 33,400 58,400 Interest expense 9,700 8, 200 Income tax expense 85,040 130,500 Net income 3.21 3.71 6,200 7,400 Basic earnings per share 310,000 306,400 Cash dividends per share $463,340 $548,900 Beginning-of -year balance sheet data Accounts receivable, net Liabilities and Equity Current liabilities Long-term notes payable Common stock, $5 par value Retained earnings Total liabilities and equity S 28,800 54 200 S 63,340 $101,300 Current notes receivable (trade) 83,800 107,000 Merchandise inventory 55,600 113400 388,000 372,500 220,000 2361000 118,048 86,971 220,000 236,000 Total assets 96,200 104,600 Common stock, $5 par value 463,340 $548,900 Retained earnings

Explanation / Answer

1A b Company Choose Numerator Cash Current Notes receivable Accounts receivable / Current liabilities Acid test ratio rounded off Barco $19,000 9700 33400 63340 0.98 1.0 Kyan 38000 8200 58400 101300 1.03 1.0 c) Accounts receivable Turnover Company Choose Numerator Net sales / Average accounts receivable c) Accounts receivable Turnover Barco $760,000 35950 21.14 times Kyan 892200 60400 14.77 times Average accounts receivable Barco (33400+9700+28800+0)/2 35950 Kyan (58400+8200+54200+0)/2 60400 f) Company Current receivable Net sales X days Day sales collected Barco 43100 / 760000 365 20.7 Kyan 66600 / 892200 365 27.2 Barco 33400+9700 43100 Kyan 58400+8200 66600 If any doubt please comment

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