Required Information [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 year's income statement Assets Cash Accounts receivable, net $ 18,000 38,400 $ 34,000 Merchandise inventory Prepaid expenses Plant assets, net 84,940 6,100 330,000 Total assets Liabilities and Equity Current liabilities Long-term notes payable Common stock, $5 par value Retained earnings $ 61,348 80,800 170,000 165,300 $91,300 115,000 Net income 388,400 Basic earnings per share $ 477,448 $ 539,500 Cash dividends per share 57,400 132,500 7,200 Sales Cost of goods sold Interest expense Income tax expense $ 790,000 588,100 9,000 $ 884,200 640,500 10,000 206,000 Total assets 127,200 Total liabilities and equity $ 477,440 $539,500 Beginning-of-year balance sheet data Accounts receivable, net Merchandise inventory Common stock, $5 par value Retained earnings 15,185 177,715 24,410 209,290 5.23 3.76 5.08 3.96 $ 29,800 $ 56,200 59,600 105,400 388,000 412,500 170,000 206,000 115,425 81,062 2a. For both companies compute the (a) profit margin ratio, (b) total asset turnover, (c) return on total assets, and (c) return on equity. Assuming that each company's stock can be purchased at $75 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. Complete this question by entering your answers in the tabs below. 2A Prof Mar 2A Tot Asset 2A Ret on Tot 2A Ret On Ratio Tum Assets Equity For both companies compute the profit margin ratio. (a) Company Barco Kyan Numerator: 2A Price Earn Ratio 2A Div Yield Req 2B Profit Margin Ratio Denominator: = Profit margin ratio = Profit margin ratio = 0% = < 2A Prof Mar Ratio 2A Tot Asset Turn > 1A Current 1A Acid Test 1A Acct Rec Ratio Ratio Turn 1A Invent Tumover 1A Days Sal in 1A Days Sal Inv 1B short term Uncol For both companies compute the acid-test ratio. (b) Company Barco Kyan + Acid-Test Ratio Numerator: Denominator: = Acid-Test Ratio Acid-test ratio + 0 to 1 0 to 1 < 1A Current Ratio 1A Acct Rec Turn > 1A Current 1A Acid Test Ratio Ratio 1A Acct Rec Turn 1A Invent 1A Days Sal in 1A Days Sal Tumover Inv Uncol 1B short term For both companies compute the accounts (including notes) receivable turnover. (c) Company Numerator: Accounts Receivable Turnover Denominator: = Barco Kyan Accounts Receivable Turnover Accounts receivable turnover 0 times 0 times < 1A Acid Test Ratio 1A Invent Turnover > 1A Invent Turnover 1A Days Sal in 1A Days Sal Inv 1B short term Uncol 1A Current 1A Acid Test 1A Acct Rec Ratio Ratio Turn For both companies compute the inventory turnover. (d) Company Inventory Turnover Numerator: I Denominator: = Inventory Turnover = Inventory turnover Barco 0 times Kyan 1 Otimes < 1A Acct Rec Turn 1A Days Sal In Inv > 1A Current Ratio 1A Acid Test Ratio 1A Acct Rec Turn 1A Invent Turnover For both companies compute the days" sales in inventory. (e) Company Numerator: 1A Days Sal in 1A Days Sal 18 short term Inv Days' Sales In Inventory Uncol Barco Kyan Denominator: x Days Days' Sales In Inventory = Days' sales in inventory = 0 days 0days < 1A Invent Turnover 1A Days Sal Uncol 1A Current Ratio 1A Acid Test Ratio 1A Acct Rec Turn 1A Invent Turnover 1A Days Sal in 1A Days Sal Inv 1B short term Uncol For both companies compute the days" sales uncollected. Company Barco Kyan Numerator: I Days' Sales Uncollected Denominator: x Days = = Days' Sales Uncollected Days' sales uncollected 0 days 0 days 1A Days Sal in Inv 1B short term > 1A Current 1A Acid Test Ratio Ratio 1A Acct Rec Turn 1A Invent Tumover 1A Days Sal in 1A Days Sal Inv Uncol 1B short term Identify the company you consider to be the better short-term credit risk. Better short-term credit risk < 1A Days Sal Uncol 1B short term >