Check my 00 Required information Problem 13-5A (Algo) Comparative ratio analysis LO P3 [The following information applies to the questions displayed below.) 2012 Part 2 of 2 Summary information from the financial statements of two companies competing in the same industry follows. Barco Company Kyan Company Barco Company Kyan Company 10 points eBook in Data from the current year-end balance sheets Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets $ 20,000 37,400 84,440 5,900 280,000 $ 427,740 $ 37,000 57,400 136,500 7,800 313,400 $ 552,100 References 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 $ 790,000 587,100 9,100 15,185 178,615 4.25 3.75 $ 880, 200 630,500 12,000 24,300 213,400 5.18 3.92 Liabilities and Equity Current liabilities Long-term notes payable Common stock, $5 par value Retained earnings Total liabilities and equity $ 62,340 85,800 210,000 69,600 $ 427,740 $ 94,300 107,000 206,000 144,800 $ 552,100 $ 26,800 55,600 398,000 210,000 48,485 $ 53,200 111,400 372,500 206,000 92,904 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 $75 per share, compute their (e) price-earnings ratios and ( dividend yields. 2b. Identify which company's stock you would recommend as the better investment. 2A Prof Mar 2A Tot Asset 2A Ret on Tot Ratio Turn Assets 2A Ret On Equity 2A Price Earn Ratio 2A Div Yield Req 2B For both companies compute the profit margin ratio. (a) Company Profit Margin Ratio Denominator: Numerator: 1 Profit margin ratio Profit margin ratio % % Barco Kyan / = 2A Prof Mar Ratio 2A Tot Asset Turn > 2A Prof Mar Ratio 2A Tot Asset Turn 2A Ret on Tot Assets 2A Ret On Equity 2A Price Earn Ratio 2A Div Yield Reg 2B For both companies compute the total asset turnover (b) Total Asset Turnover Company Numerator: 1 Denominator: = Total Asset Turnover = Total asset turnover Barco 1 = times Kyan times 2A Prof Mar Ratio 2A Tot Asset Turn 2A Ret on Tot Assets 2A Ret On Equity 2A Price Earn Ratio 2A Div Yield Reg 2B For both companies compute the return on total assets. (c) Return on Total Assets Company Numerator: Denominator: Return on Total Assets = Return on total assets Barco % Kyan % 2A Tot Asset Turn 2A Ret On Equity 2A Prof Mar Ratio 2A Tot Asset Turn 2A Ret on Tot Assets 2A Ret On Equity 2A Price Earn Ratio 2A Div Yield Req 2B For both companies compute the return on equity. (d) Company Return On Equity Denominator Numerator: = Return On Equity Return On equity Barco = % 1 1 Kyan % 2A Prof Mar Ratio 2A Tot Asset Turn 2A Ret on Tot Assets 2A Ret On Equity 2A Price Earn Ratio 2A Div Yield Reg 2B Assuming that share and each company's stock can be purchased at $75 per share, compute their price-earnings ratios. (e) Price-Earnings Ratio Denominator: Company Numerator: 1 Price-Earnings Ratio Price-earnings ratio Barco times times Kyan 2A Ret On Equity 2A Div Yield > 2A Prof Mar Ratio 2A Tot Asset Turn 2A Ret on Tot Assets 2A Ret On Equity 2A Price Earn Ratio 2A Div Yield Req 2B Assuming that each company's stock can be purchased at $75 per share, compute their dividend yields. () Dividend Yield Denominator: Company Numerator: Dividend Yield = Dividend yield Barco % Kyan 2A Prof Mar Ratio 2A Tot Asset 2A Ret on Tot Turn Assets 2A Ret On Equity 2A Price Earn Ratio 2A Div Yield Req 2B Identify which company's stock you would recommend as the better investment. The better investment