Please fill in the answers in the pictures. Problem 13-5A Comparative ratio anal
ID: 2520649 • Letter: P
Question
Please fill in the answers in the pictures.
Problem 13-5A Comparative ratio analysis LO A1, P3 The following information applies to the questions displayed below.] Summary information from the financial statements of two companies competing in the same industry follows Barco Company Company Kyan Kyan Barco Data from the current year's income statement $ 770,000 585,100 7,900 Company Company Data from the current year-end balance sheets Sales $ 880,200 Assets 632,500 Cash $ 19,500 34,000 Cost of goods sold Accounts receivable, net Current notes receivable (trade) Merchandise inventory Prepaid expenses 37,400 9,100 84,440 5,000 57,400Interest expense 13,000 24,300 162,200 210,400 5.11 3.93 14,800 4.51 3.81 /,200 Income tax expense 132,500 Net income 6,950Basic earnings per share 304,400 Plant assets, net 290,000 Cash dividends per share 542,450 Total assets $445,440 $ Beginning-of-year balance sheet data Accounts receivable, net Current notes receivable (trade) $ 29,800 54,200 0 Liabilities and Equity Current liabilities Long-term notes payable Common stock, $5 par value $ 61,340 93,300 0 55,600 398,000 80,800 180,000 123,300 42150 101,000 Merchandise inventory 206,000 107,400 382,500 Total assets 206,000 Retained earnings Common stock, $5 par value 180,000 542,450 lotal liabilities and equity $445,440 $ Retained earnings 98,300 93,600Explanation / Answer
Answer of Part 1.1 (a):
For Barco:
Current Assets = Cash + Accounts Receivable + Current Notes Receivable+ Merchandise Inventory + Prepaid Expenses
Current assets = $19,500 + $37,400 + $9,100 + $84,440 + $5,000
Current Assets = $155,440
Current Ratio = Current Asset / Current Liabilities
Current Ratio = $155,440 / $61,340
Current Ratio = 2.5:1
For Kyan:
Current Assets = Cash + Accounts Receivable + Current Notes Receivable+ Merchandise Inventory + Prepaid Expenses
Current assets = $34,000 + $57,400 + $7,200 + $132,500 + $6,950
Current Assets = $238,050
Current Ratio = Current Asset / Current Liabilities
Current Ratio = $238,050 / $93,300
Current Ratio = 2.6:1
Answer of Part 1.1 (b):
For Barco:
Acid Test Ratio = (Current Asset – Merchandise Inventory) / Current Liabilities
Acid Test Ratio = ($155,440 - $84,440) / $61,340
Acid Test Ratio = 1.5:1
For Kyan:
Acid Test Ratio = (Current Asset – Merchandise Inventory) / Current Liabilities
Acid Test Ratio = ($238,050 - $132,500) / $93,300
Acid Test Ratio = 1.1:1
Answer of Part 1.1 (c):
For Barco:
Beginning Receivable = Beginning Accounts Receivable + Beginning Notes Receivable
Beginning Receivable = $29,800 + 0
Beginning Receivable = $29,800
Ending Receivable = Ending Accounts Receivable + Ending Notes Receivable
Ending Receivable = $37,400 + $9,100
Ending Receivable = $46,500
Average Receivable = (Beginning Receivable + Ending Receivable) /2
Average Receivable = ($29,800 + $46,500) / 2
Average Receivable = $76,300
Accounts Receivable Turnover = Sales / Average Receivable
Accounts Receivable Turnover = $770,000 / $76,300
Accounts Receivable Turnover = 10 times
For Kyan:
Beginning Receivable = Beginning Accounts Receivable + Beginning Notes Receivable
Beginning Receivable = $54,200 + 0
Beginning Receivable = $54,200
Ending Receivable = Ending Accounts Receivable + Ending Notes Receivable
Ending Receivable = $57,400 + $7,200
Ending Receivable = $64,600
Average Receivable = (Beginning Receivable + Ending Receivable) /2
Average Receivable = ($54,200 + $64,600) / 2
Average Receivable = $59,400
Accounts Receivable Turnover = Sales / Average Receivable
Accounts Receivable Turnover = $880,200 / $59,400
Accounts Receivable Turnover = 14.8 times
Answer of Part 1.1 (d):
For Barco:
Average Inventory =(Beginning Inventory + Ending Inventory) /2
Average Inventory = ($55,600 + $84,440) /2
Average Inventory = $70,020
Inventory Turnover Ratio = Cost of goods Sold / Average Inventory
Inventory Turnover Ratio = $585,100 /$70,020
Inventory Turnover Ratio = 8.4 times
For Kyan:
Average Inventory = (Beginning Inventory + Ending Inventory) /2
Average Inventory = ($107,400 + $132,500) /2
Average Inventory = $119,950
Inventory Turnover Ratio = Cost of goods Sold / Average Inventory
Inventory Turnover Ratio = $632,500 /$119,950
Inventory Turnover Ratio = 5.3 times
Answer of Part 1.1 (e):
For Barco:
Days in sales inventory = 360days / Inventory Turnover Ratio
Days in sales Inventory = 360days / 8.4
Days in Sales Inventory = 43 days
For Kyan:
Days in sales inventory = 360days / Inventory Turnover Ratio
Days in sales Inventory = 360days / 5.3
Days in Sales Inventory = 68 days