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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	$ 800,000	$ 905,200
Cash	$ 20,000	$ 35,000	Cost of goods sold	591,100	650,500
Accounts receivable, net	37,400	58,400	Interest expense	7,900	15,000
Merchandise inventory	84,840	134,500	Income tax expense	15,377	24,990
Prepaid expenses	5,900	7,750	Net income	185,623	214,710
Plant assets, net	370,000	307,400	Basic earnings per share	4.22	5.48
Total assets	$ 518,140	$ 543,050	Cash dividends per share	3.76	3.96
Liabilities and Equity			Beginning-of-year balance sheet data
Current liabilities	$ 63,340	$ 98,300	Accounts receivable, net	$ 26,800	$ 58,200
Long-term notes payable	83,800	113,000	Merchandise inventory	59,600	117,400
Common stock, $5 par value	220,000	196,000	Total assets	448,000	372,500
Retained earnings	151,000	135,750	Common stock, $5 par value	220,000	196,000
Total liabilities and equity	$ 518,140	$ 543,050	Retained earnings	130,817	76,272

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 companys stock can be purchased at $100 per share, compute their (e) price-earnings ratios and (f) dividend yields.

2b. Identify which companys stock you would recommend as the better investment.

Complete this question by entering your answers in the tabs below. For both companies compute the profit margin ratio