The following summaries from the income statements and balance sheets of Kouris Company and Brittania, Inc. are presented below.(1) For both companies for Year 2, compute the:(a) Current ratio(b) Acid-test ratio(c) Accounts receivable turnover(d) Inventory turnover(e) Days' sales in inventory(f) Days' sales uncollectedWhich company do you consider to be the better short-term credit risk? Explain.(2) For both companies for Year 2, compute the:(a) Profit margin ratio(b) Return on total assets(c) Return on common stockholders' equityWhich company do you consider to have better profitability ratios?Kouris Company Consolidated Balance Sheets(in millions)?May 31?Year 2Year 1AssetsCurrent assets:?? Cash and cash equivalents$ 634.0$575.5 Accounts receivable, net of

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allowance2,101.11,804.1  Inventories1,514.91,373.8  Other current assets  429.9  401.3  Total current assets  4,679.9  4,154.7Property, plant, and equipment, net1,620.81,614.5Other long term assets  413.2  670.8  Total assets$6,713.9$6,440.0???Liabilities and Stockholders' EquityCurrent liabilities:??  Current portion of long-term debt$ 205.7$ 55.3  Notes payable75.4425.2  Accounts payable572.7504.4  Accrued liabilities1,054.2765.3  Income taxes payable  107.2  83.0  Total current liabilities2,015.21,833.2Long term liabilities  708.0  767.8  Total liabilities  2,723.2  2,601.0Stockholders' equity:??  Common stock2.82.8  Contributed capital in excess of par value589.0538.7  Unearned stock compensation(0.6)(5.1)  Accumulated other comprehensive loss(239.7)(192.4)  Retained earnings  3,639.2  3,495.0  Total stockholders' equity  3,990.7  3,839.0  Total liabilities and stockholders' equity$6,713.9$6,440.0Kouris CompanyConsolidated Statement of IncomeMay 31, Year 2(in millions)Revenues$10,697.0Cost of sales  6,313.6Gross profit4,383.4Operating expenses  3,137.6Operating income1,245.8Interest expense42.9Other revenues and expenses  79.9Income before tax1,123.0Income taxes  382.9Income before effect of accounting change740.1Cumulative effect of accounting change, net of tax  266.1Net income$ 474.0??Brittania, Inc.Consolidated Balance Sheets?Jan. 3,Jan. 4,?Year 2Year 1AssetsCurrent assets:??  Cash and cash equivalents$34.5$22.2  Accounts receivable, net of allowance15.514.7  Inventories27.228.4  Other current assets  3.5  4.2  Total current assets80.769.5Property, plant, and equipment, net5.77.0Other long term assets  1.1  1.5  Total assets$87.5$78.0???Liabilities and Stockholders' EquityCurrent liabilities:??  Accounts payable$ 8.5$ 6.6  Accrued liabilities  7.8  5.6  Total current liabilities16.312.2Long term liabilities  2.5  2.6  Total liabilities 18.8 14.8Stockholders' equity:??  Common stock2.32.3  Contributed capital in excess of par value17.817.4  Unearned stock compensation(0.1)(0.5)  Accumulated other comprehensive loss(0.9)(1.3)  Treasury stock(6.3)(5.4)  Retained earnings  55.9  50.7  Total stockholders' equity  68.7  63.2  Total liabilities and stockholders' equity$87.5$78.0Brittania, Inc.Consolidated Statement of IncomeJanuary 3, Year 2(in millions)Revenues$133.5Cost of sales  87.3Gross profit46.2Operating expenses  37.3Operating income8.9Interest expense(0.1)Other revenues and expenses  0.3Income before tax9.1Income taxes  3.9Net income$ 5.2

What will be an ideal response?

Answer 1