! Required information Ratio analysis [The following information applies to the questions displayed below.] Summary information from the financial statements of two companies competing in the same industry follows. Iroquois Company Percy Company Iroquois Company Percy Company Data from the current year-end balance sheets Data from the current year's income statement Assets Merchandise inventory Prepaid expenses Cash $ 18,500 $ 33,000 Accounts receivable, net 36,400 84,440 Plant assets, net 5,500 300,000 Total assets Liabilities and Equity Current liabilities Long-term notes payable Common stock, $5 par value Retained earnings $ 444,840 $ 545,250 $ 63,340 $ 93,300 101,000 206,000 Total assets 144,950 Total liabilities and equity $ 444,840 $ 545,250 80,800 190,000 110,700 59,400 138,500 6,950 307,400 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 Common stock, $5 par value Retained earnings $ 780,000 $ 878,200 590,100 9,300 640,500 13,000 14,992 24,244 165,608 200,456 4.36 3.73 4.87 3.96 $ 26,800 $ 57,200 61,600 105,400 408,000 372,500 190,000 206,000 86,832 107,646 Ratio Analysis Problem 5 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 $100 per share, compute their (e) price-earnings ratios and (f) dividend yields. 2b. Identify which company's stock you would recommend as the better investment.