Required information Problem 13-5A 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. Kyan Barco Barco Kyan Company Company Company Company Data from the current year-end balance Data from the current year's income sheets statement Assets Sales $770,000 $880, 200 Cash $ 19,500 $ 34,000 Cost of goods sold 585,100 632,500 Accounts receivable, net 46,500 64,600 Interest expense 7,900 13,000 Merchandise inventory 84,440 132,500 Income tax expense 14,800 24,500 Prepaid expenses 5,000 6,950 Net income 162,200 210,400 Plant assets, net 290,000 304,400 Basic earnings per 4.51 share 5.11 Total assets $445,440 $542, 450 Cash dividends per 3.81 3.93 share Liabilities and Equity Beginning-of-year balance sheet data Current liabilities $ 61,340 $ 93,300 Accounts receivable, $ 29,800 $ 54,400 net Long-term notes payable 80,800 101,000 Merchandise inventory 55,600 107,400 Common stock, $5 par 180,000 206,000 Total assets 398,000 382,500 value Retained earnings 123,300 142, 150 Common stock, $5 par 180,000 206,000 value Total liabilities and $445,440 $542,450 Retained earnings 98,300 93,000 equity Problem 13-5A 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 each company's stock can be purchased at $75 per share, compute their (e) price-earnings ratios and ( dividend yields. (Do not round intermediate calculations. Round your answers to 2 decimal places.) 2b. Identify which company's stock you would recommend as the better investment Complete this question by entering your answers in the tabs below. 2A Prof 2A Tot 2A Ret on 2A Ret 2A Price Mar Ratio Asset Tot On Com For both companies compute the profit margin ratio. Earn 2A Div Yield Req 2B (a) Profit Margin Ratio Choose Denominator: Choose Numerator: Company Profit margin ratio Profit margin ratio % Barco Kyan 2A Prof Mar Ratio 2A Tot Asset Turn > 2A Prof Mar Ratio 2A Tot Asset 2A Ret on Tot 2A Ret On Com 2A Price Earn 2A Div Yield Req 2B For both companies compute the total asset turnover (b) Total Asset Turnover Company Choose Numerator: 1 Choose Denominator: = Total Asset Turnover Total asset turnover times times Barco Kyan = 2A Prof Mar Ratio 2A Tot Asset 2A Ret on Tot 2A Ret On Com 2A Price Earn 2A Div Yield Req 2B For both companies compute the return on total assets. Return on Total Assets (c) Company Choose Numerator: 1 Choose Denominator: = Return on Total Assets Return on total assets % % Barco Kyan 2A Prof Mar Ratio 2A Tot Asset 2A Ret on Tot 2A Ret On Com 2A Price Earn 2A Div Yield Reg 2B For both companies compute the return on common stockholders' equity. (d) Return On Common Stockholders' Equity Choose Denominator Company Choose Numerator: Return On Common Stockholders' Equity Return on common stockholders' equity / Barco Kyan % % 2A Prof Mar Ratio 2A Tot Asset 2A Ret on Tot 2A Ret On Com 2A Price Earn 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 Choose Denominator: Company Choose Numerator: Price-Earnings Ratio Price-Earnings Ratio times times = Barco Kyan / = 2A Prof 2A Tot 2A Ret on 2A Ret 2A Price 2A Div Asset Mar Ratio Tot On Com Req 2B Earn Yield Assuming that each company's stock can be purchased at $75 per share, compute their dividend yields. Dividend Yield (f) Company Choose Numerator: I Choose Denominator: = / Dividend Yield Dividend Yield % % 1 Barco Kyan 1 2A Ret on 2A Prof Mar Ratio 2A Tot Asset 2A Ret On Com 2A Price Earn Tot 2A Div Yield Req 2B Identify which company's stock you would recommend as the better investment. The better investment