Summary information from the financial statements of two companies competing in
ID: 2609561 • Letter: S
Question
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 93,600Explanation / Answer
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
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