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 Data from the current year's balance sheets income statement Assets Sales Cash $ 22,500 $ 38,000 Cost of goods sold $ 780,000 596,100 $ 906,200 634,500 Accounts receivable, net 35,400 60,400 Merchandise inventory Prepaid expenses Plant assets, net Total assets Liabilities and Equity Current liabilities Long-term notes payable Common stock, $5 par value Retained earnings Total liabilities and equity 84,540 5,400 350,000 $ 497,840 $ 550,100 $ 61,340 $ 101,300 81,800 109,000 210,000 144,700 Cash dividends per share Beginning-of-year balance sheet data Accounts receivable, net Merchandise inventory 216,000 Total assets 123,800 $ 497,840 $ 550,100 Common stock, $5 par value Retained earnings 140,500 Interest expense Income tax expense 7,800 13,000 14,992 25,017 7,800 303,400 Net income 161,108 233,683 Basic earnings per share 3.84 5.41 3.72 3.96 $ 26,800 $ 52,200 53,600 113,400 408,000 362,500 210,000 216,000 139,832 61,189 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 $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 Turn Assets Equity For both companies compute the profit margin ratio. (a) Company Barco Kyan 2A Price Earn Ratio 2A Div Yield Req 2B Profit Margin Ratio Numerator: 1 Denominator: = Profit margin ratio = Profit margin ratio = % = % 2A Prof Mar Ratio 2A Tot Asset Turn > 2A Prof Mar Ratio Turn 2A Tot Asset 2A Ret on Tot Assets 2A Ret On Equity 2A Price Earn Ratio 2A Div Yield Req 2B For both companies compute the total asset turnover (b) Company Numerator: Barco Kyan Total Asset Turnover Denominator: || = = Total Asset Turnover Total asset turnover < 2A Prof Mar Ratio 2A Ret on Tot Assets > times times 2A Prof Mar 2A Tot Asset 2A Ret on Tot Ratio Turn Assets 2A Ret On Equity 2A Price Earn Ratio 2A Div Yield Req 2B For both companies compute the return on total assets. (c) Company Barco Kyan Return on Total Assets Numerator: 1 Denominator: = Return on Total Assets = Return on total assets 1 1 = % = % < 2A Tot Asset Turn 2A Ret On Equity > 2A Prof Mar Ratio Turn 2A Tot Asset 2A Ret on Tot Assets 2A Ret On Equity 2A Price Earn Ratio 2A Div Yield Req 2B For both companies compute the return on equity. (d) Company Numerator: Barco Kyan Return On Equity Denominator Return On Equity = Return On equity = || % = % 2A Ret on Tot Assets 2A Price Earn Ratio 2A Prof Mar Ratio 2A Tot Asset 2A Ret on Tot 2A Ret On Turn Assets Equity 2A Price Earn Ratio 2A Div Yield Req 2B Assuming that share and each company's stock can be purchased at $75 per share, compute their price-earnings ratios. (e) Company Numerator: 1 I Price-Earnings Ratio Denominator: Price-Earnings Ratio = Price-earnings ratio = II times Barco Kyan I = < 2A Ret On Equity 2A Div Yield > times 2A Prof Mar 2A Tot Asset 2A Ret on Tot Ratio Turn Assets 2A Ret On 2A Price Earn Equity Ratio 2A Div Yield Req 2B Assuming that each company's stock can be purchased at $75 per share, compute their dividend yields. (f) Company Barco Kyan Numerator: 1 Dividend Yield Denominator: = Dividend Yield = Dividend yield = % = % < 2A Price Earn Ratio Req 2B > 2A Prof Mar 2A Tot Asset 2A Ret on Tot Ratio Turn Assets 2A Ret On Equity 2A Price Earn Ratio 2A Div Yield Req 2B Identify which company's stock you would recommend as the better investment. The better investment < 2A Div Yield Req 2B >