- Required Information Problem 13 5a Algo Comparative Ratio Analysis Lo P3 The Following Information Applies To The Que 1 (475.56 KiB) Viewed 44 times
Required information Problem 13-5A (Algo) Comparative ratio analysis LO 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 Kyan Company Barco Company Kyan Company Data from the current year- end balance sheets Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets $ 20,500 $ 32,000 39,400 59,400 84,440 138,500 5,900 7,100 350,000 306,400 $ 500,240 $ 543,400 Data from the current year's income statement Sales Cost of goods sold Interest expense Income tax expense Net income Basic earnings per share Cash dividends per share Beginning-of-year balance sheet data Accounts receivable, net Merchandise inventory Total assets Common stock, $5 par value Retained earnings $ 810,000 $ 924,200 591,100 640,500 7,600 19,000 15,569 25,514 195,731 239,186 5.15 5.81 3.72 3.98 Liabilities and Equity Current liabilities Long-term notes payable Common stock, $5 par value Retained earnings Total liabilities and equity $ 63,340 $ 104,300 81,800 103,000 190,000 206,000 165, 100 130, 100 $ 500,240 $ 543,400 $ 30,800 53,600 448,000 190,000 110,729 57,200 105,400 362,500 206,000 54,890 Problem 13-5A (Algo) Part 1 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 (ñ days' sales uncollected. (Do not round intermediate calculations.) 1b. Identify the company you consider to be the better short-term credit risk.
Problem 13-5A (Algo) Part 2 2a. For both companies compute the (a) profit margin ratio, (b) total asset turnover, (c) return on total assets, and (d) return on equity. Assuming that each company's stock can be purchased at $95 per share, compute their (e) price-earnings ratios and (h) dividend yields. 2b. Identify which company's stock you would recommend as the better investment.