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Summary information from the financial statements of two companies competing in the same industry follows.

	Barco Company			Kyan Company					Barco Company			Kyan Company
Data from the current year-end balance sheets								Data from the current years income statement
Assets								Sales	$	770,000		$	920,200
Cash	$	19,500		$	32,000			Cost of goods sold		590,100			650,500
Accounts receivable, net		33,400			52,400			Interest expense		8,100			17,000
Merchandise inventory		84,740			138,500			Income tax expense		14,800			25,404
Prepaid expenses		5,400			7,200			Net income		157,000			227,296
Plant assets, net		290,000			305,400			Basic earnings per share		4.36			5.52
Total assets	$	433,040		$	535,500			Cash dividends per share		3.72			3.94
Liabilities and Equity								Beginning-of-year balance sheet data
Current liabilities	$	70,340		$	92,300			Accounts receivable, net	$	27,800		$	53,200
Long-term notes payable		80,800			105,000			Merchandise inventory		63,600			107,400
Common stock, $5 par value		180,000			206,000			Total assets		418,000			412,500
Retained earnings		101,900			132,200			Common stock, $5 par value		180,000			206,000
Total liabilities and equity	$	433,040		$	535,500			Retained earnings		78,820			67,232

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. (Do not round intermediate calculations.) 1b. Identify the company you consider to be the better short-term credit risk.

1A Current Ratio 1A Acid Test Ratio 1A Acct Rec Turn 1A Invent Turnover 1A Days Sal in Inv 1A Days Sal Uncol 1B short term For both companies compute the current ratio. Current Ratio (a) Company Choose Numerator: 1 Choose Denominator: = Current Ratio / = Current ratio Barco 1 = 0 to 1 0 to 1 Kyan 1 II 1A Current Ratio 1A Acid Test Ratio 1A Acct Rec Turn 1A Invent Turnover 1A Days Sal in Inv 1A Days Sal Uncol 1 B short term For both companies compute the acid-test ratio. Acid-Test Ratio (b) Company Choose Numerator: Choose Denominator: Acid-Test Ratio + + = Acid-test ratio Barco + + 0 to 1 Kyan + + / 0 to 1 1A Current Ratio 1A Acid Test Ratio 1A Acct Rec Turn 1A Invent Turnover 1A Days Sal in Iny 1A Days Sal Uncol 1B short term For both companies compute the accounts (including notes) receivable turnover. (c) Accounts Receivable Turnover Company Choose Numerator: 1 Choose Denominator: Accounts Receivable Turnover 1 Accounts receivable turnover Barco / = 0 times Kyan / = 0 times 1A Current Ratio 1A Acid Test Ratio 1A Acct Rec Turn 1A Invent Turnover 1A Days Sal in Inv 1A Days Sal Uncol 1B short term For both companies compute the inventory turnover. (d) Inventory Turnover Company Choose Numerator: 1 Choose Denominator: = Inventory Turnover Inventory turnover 1 Il Barco 1 = 0 times Kyan / = 0 times 1A Current Ratio 1A Acid Test Ratio 1A Acct Rec Turn 1A Invent Turnover 1A Days Sal in Inv 1A Days Sal Uncol 1B short term For both companies compute the days' sales in inventory. Days' Sales in Inventory. (e) Company Choose Numerator: | Choose Denominator: Days = Days' Sales in Inventory = Days' sales in inventory 1 Barco 1 = 0 days Kyan 1 II 0 days 1A Current Ratio 1A Acid Test Ratio 1A Acct Rec Turn 1A Invent Turnover 1A Days Sal in Inv 1A Days Sal Uncol 1B short term For both companies compute the days' sales uncollected. Days' Sales Uncollected (f) CompanyChoose Numerator: | Choose Denominator: Days = Days' Sales Uncollected = Days' sales uncollected / x Barco 1 11 0 days XIX Kyan 0 days

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