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			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		$	912,200
Cash	$	18,500		$	34,000			Cost of goods sold		593,100			644,500
Accounts receivable, net		35,400			60,400			Interest expense		8,800			13,000
Current notes receivable (trade)		9,500			7,000			Income tax expense		14,800			25,183
Merchandise inventory		84,840			132,500			Net income		153,300			229,517
Prepaid expenses		5,100			7,100			Basic earnings per share		3.65			4.66
Plant assets, net		340,000			308,400			Cash dividends per share		3.77			3.97
Total assets	$	493,340		$	549,400
								Beginning-of-year balance sheet data
Liabilities and Equity								Accounts receivable, net	$	29,800		$	51,200
Current liabilities	$	64,340		$	96,300			Current notes receivable (trade)		0			0
Long-term notes payable		81,800			115,000			Merchandise inventory		61,600			111,400
Common stock, $5 par value		210,000			246,000			Total assets		428,000			392,500
Retained earnings		137,200			92,100			Common stock, $5 par value		210,000			246,000
Total liabilities and equity	$	493,340		$	549,400			Retained earnings		142,240			57,907

Problem 13-5 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 common stockholders equity. Assuming that share and each companys stock can be purchased at $80 per share, compute their (e) price-earnings ratios and (f) dividend yields. (Do not round intermediate calculations. Round your answers to 2 decimal places.) 2b. Identify which companys stock you would recommend as the better investment.

Complete this question by entering your answers in the tabs below. 2A Ret On 2A Price Earn 2A Pro Marq2A Tot Asset Ratio 2A Ret on Tot 2A Div Yield Com Stock Req 2B Turn Ratio Assets Equity For both companies compute the profit margin ratio. Profit Margin Ratio CompanyChoose Numerator: Choose Denominator:Profit margin ratio Net sales Net income Profit margin ratio 153,300 01% Barco 01% 229,517 / Kyan Complete this question by entering your answers in the tabs below. 2A Ret On2A Price Earn 2A Tot Asset -2A Ret on Tot Turn 2A Pro Marg Ratio 2A Div Yield Req 2B Ratio Assets Equity For both companies compute the total asset turnover Total Asset Turnover Company Choose Numerator: I Choose Denominator: = Total Asset Turnover Net sales Average total assets Total asset turnover 770,000 0 times Barco 912,200 0 times Kyan Complete this question by entering your answers in the tabs below. 2A Ret On2A Price Earn 2A Pro Marg 2A Tot Asset2A Ret on Tot Turn 2A Div Yield Com Stock Req 2B Ratio Assets Ratio Equity For both companies compute the return on total assets Return on Total Assets Company Choose Numerator: 1 Choose Denominator: = Return on Total Assets I Average total assets et income = Return on total assets 01% 153,300 I Barco Kyan 229,517 / 01% Complete this question by entering your answers in the tabs below. 2A Pro Marg 2A Tot Asset Turn 2A Ret on Tot Assets 2A Div Yield Req 2B Ratio Equity | For both companies compute the return on common stockholders' equity Return On Common Stockholders' Equity Company Choose Numerator: Choose Denominator Return On Common Stockholders' Equity Net income | -Preferred dividends / Average common stockholders' equity = Return On common stockholders' equity 153,300 Barco 01% Kyan 229,517 01% Complete this question by entering your answers in the tabs below. 2A Ret On -2A Price Earn E 2A Ret On 2A Tot Asset Turn 2A Ret on Tot Req 2B 2A Pro Marg Ratio 2A Div Yield Ratio Assets Equity Assuming that share and each company's stock can be purchased at $80 per share, compute their price-earnings ratios. Price-Earnings Ratio Price-Earnings Ratio Choose Denominator: Choose Numerator: Company = Price-earnings ratio Earnings per share arket price per common share 0 times Barco 0 times Kyan Complete this question by entering your answers in the tabs below. 2A Ret On 2A Price Earn 2A Div Yield 2A Pro Marg Ratio 2A Tot Asset 2A Ret on Tot Req 2B Com Stock Ratio Turn Assets Equit Assuming that share and each company's stock can be purchased at $75 per share, compute their dividend yields Dividend Yield Company Choose Numerator: Choose Denominator: Dividend Yield = Dividend yield Annual cash dividends per share/ Market price per share Barco 801 = Kyan 801 =