Carson Electronics, Inc. Balance Sheet ($000) BGT Electronics, Inc. Balance Shee
ID: 391791 • Letter: C
Question
Carson Electronics, Inc.
Balance Sheet ($000)
BGT Electronics, Inc.
Balance Sheet ($000)
Cash
$ 1 comma 960$1,960
$ 1 comma 510$1,510
Accounts receivable
4 comma 4904,490
5 comma 9705,970
Inventories
1 comma 5201,520
2 comma 5002,500
Current assets
$ 7 comma 970$7,970
$ 9 comma 980$9,980
Net fixed assets
15 comma 96015,960
25 comma 05025,050
Total assets
$ 23 comma 930$23,930
$ 35 comma 030$35,030
Accounts payable
$ 2 comma 550$2,550
$ 4 comma 960$4,960
Accrued expenses
1 comma 0301,030
1 comma 4501,450
Short-term notes payable
3 comma 4603,460
1 comma 4701,470
Current liabilities
$ 7 comma 040$7,040
$ 7 comma 880$7,880
Long-term debt
8 comma 0108,010
4 comma 0404,040
Owners' equity
8 comma 8808,880
23 comma 11023,110
Total liabilities and owners' equity
$ 23 comma 930$23,930
$ 35 comma 030$35,030
Carson Electronics, Inc.
Income Statement ($000)
BGT Electronics, Inc.
Income Statement ($000)
Net sales (all credit)
$ 48 comma 050$48,050
$ 70 comma 000$70,000
Cost of goods sold
( 36 comma 000 )(36,000)
( 42 comma 020 )(42,020)
Gross profit
$ 12 comma 050$12,050
$ 27 comma 980$27,980
Operating expenses
( 8 comma 040 )(8,040)
( 11 comma 950 )(11,950)
Net operating income
$ 4 comma 010$4,010
$ 16 comma 030$16,030
Interest expense
( 1 comma 150 )(1,150)
( 510 )(510)
Earnings before taxes
$ 2 comma 860$2,860
$ 15 comma 520$15,520
(40 %40%)
( 1 comma 144 )(1,144)
( 6 comma 208 )(6,208)
Net income
$ 1 comma 716$1,716
$ 9 comma 312$9,312
a.Calculate the following ratios for both Carson and BGT:
Current ratio
Times interest earned
Inventory turnover
Total asset turnover
Operating profit margin
Operating return on assets
Debt ratio
Average collection period
Fixed asset turnover
Return on equity
b.Analyze the differences you observe between the two firms. Comment on what you view as weaknesses in the performance of Carson as compared to BGT that Carson's management might focus on to improve its operations.
a.Calculate the following ratios for both Carson and BGT:
Carson's current ratio is
nothing.
(Round to two decimal places.)
Carson Electronics, Inc.
Balance Sheet ($000)
BGT Electronics, Inc.
Balance Sheet ($000)
Cash
$ 1 comma 960$1,960
$ 1 comma 510$1,510
Accounts receivable
4 comma 4904,490
5 comma 9705,970
Inventories
1 comma 5201,520
2 comma 5002,500
Current assets
$ 7 comma 970$7,970
$ 9 comma 980$9,980
Net fixed assets
15 comma 96015,960
25 comma 05025,050
Total assets
$ 23 comma 930$23,930
$ 35 comma 030$35,030
Accounts payable
$ 2 comma 550$2,550
$ 4 comma 960$4,960
Accrued expenses
1 comma 0301,030
1 comma 4501,450
Short-term notes payable
3 comma 4603,460
1 comma 4701,470
Current liabilities
$ 7 comma 040$7,040
$ 7 comma 880$7,880
Long-term debt
8 comma 0108,010
4 comma 0404,040
Owners' equity
8 comma 8808,880
23 comma 11023,110
Total liabilities and owners' equity
$ 23 comma 930$23,930
$ 35 comma 030$35,030
Explanation / Answer
Carson
BGT
Current ratio
current assets/ current liabilities
1.13
1.27
Inventory turnover
Cost of Goods Sold/Average Inventory.
23.68
16.81
Total asset turnover
net sales/average total assets
2.01
2.00
Operating profit margin
Operating Earnings / Revenue
0.08
0.23
Operating return on assets
net income / total assets
0.07
0.27
Debt ratio
total liabilities/ total assets
1.00
1.00
accounts receivable turnover ratio
net value of credit sales/accounts receivable
10.70
11.73
Average collection period
365 days /accounts receivable turnover ratio
34.11
31.13
Fixed asset turnover
sales/fixed assets
3.01
2.79
Return on equity
net income /average shareholder equity
0.19
0.40
BGT’s performance is much better as compared to Carson due to:
Carson
BGT
Current ratio
current assets/ current liabilities
1.13
1.27
Inventory turnover
Cost of Goods Sold/Average Inventory.
23.68
16.81
Total asset turnover
net sales/average total assets
2.01
2.00
Operating profit margin
Operating Earnings / Revenue
0.08
0.23
Operating return on assets
net income / total assets
0.07
0.27
Debt ratio
total liabilities/ total assets
1.00
1.00
accounts receivable turnover ratio
net value of credit sales/accounts receivable
10.70
11.73
Average collection period
365 days /accounts receivable turnover ratio
34.11
31.13
Fixed asset turnover
sales/fixed assets
3.01
2.79
Return on equity
net income /average shareholder equity
0.19
0.40
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