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 Kyan Company Company Data from the current year-end balance sheets Assets Cash $ 21,500 $ 37,000 Accounts receivable, net 34,400 50,400 Merchandise inventory 84,640 142,500 Prepaid expenses 5,700 7,200 Plant assets, net 290,000 308,400 Total assets $436, 240 $545,500 Barco Kyan Company Company Data from the current year's income statement Sales $ 790,000 $882,200 Cost of goods sold 584,100 646,500 8,000 13,000 Income tax expense 15,185 24,355 Net income 182,715 198,345 Basic earnings per share 4.81 4.39 Cash dividends per share 3.71 3.97 Liabilities and Equity Current liabilities Long-term notes payable Common stock, $5 par value Retained earnings Total liabilities and equity $ 66,340 $ 99, 300 83,800 113,000 190,000 226,000 96,100 107,200 $436, 240 $545,500 Beginning-of-year balance sheet data Accounts receivable, net Merchandise inventory Total assets Common stock, $5 par value Retained earnings $ 29,800 $ 52,200 55,600 113,400 388,000 412,500 190,000 226,000 54,365 88,299 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 $80 per share, compute their (e) price-earnings ratios and (1) 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. 2A Prof Mar Ratio 2A Tot Asset 2A Ret on Tot Turn Assets 2A Ret On Com Stock 2A Price Earn Ratio 2A Div Yield Req 2B For both companies compute the profit margin ratio. (a) Company Choose Numerator: Profit Margin Ratio 1 Choose Denominator: = Profit margin ratio = Profit margin ratio 0 % 1 = 0% Barco Kyan 2A Prof Mar Ratio 2A Tot Asset 2A Ret on Tot Turn Assets 2A Ret On Com Stock 2A Price Earn Ratio 2A Div Yield Req 2B For both companies compute the total asset turnover (b) Total Asset Turnover I Choose Denominator: Company Choose Numerator: = Total Asset Turnover Total asset turnover Barco 0 times 0 times Kyan LLLLLLLLLLLLLL 2A Prof Mar Ratio 2A Tot Asset 2A Ret on Tot Turn Assets 2A Ret On Com Stock 2A Price Earn Ratio 2A Div Yield Req 2B For both companies compute the return on total assets. (c) Company Choose Numerator: Return on Total Assets I Choose Denominator: = Return on Total Assets = Return on total assets Barco 0 % Kyan 0 % 2A Prof Mar Ratio 2A Tot Asset 2A Ret on Tot Turn Assets 2A Ret On 12A Price Earn Com Stock Ratio 2A Div Yield Req 2B For both companies compute the return on common stockholders' equity. (d) Company Return On Common Stockholders' Equity. 1. Choose Denominator Choose Numerator: = Return On Common Stockholders' Equity Return On common stockholders' equity Barco Kyan - I 2A Prof Mar Ratio 2A Tot Asset 2A Ret on Tot Turn Assets 2A Ret On 12A Price Earn Com Stock Ratio 2A Div Yield Req 2B Assuming that share and each company's stock can be purchased at $80 per share, compute their price-earnings ratios. (e) Company Price-Earnings Ratio 7 Choose Denominator: Choose Numerator: = Price-Earnings Ratio = Price-earnings ratio 0 times Barco Kyan 2A Prof Mar Ratio 2A Tot Asset Turn 2A Ret on Tot Assets 2A Ret On Com Stock 2A Price Earn Ratio 2A Div Yield Req 2B Assuming that each company's stock can be purchased at $80 per share, compute their dividend yields. Dividend Yield (f) Company Choose Numerator: | Choose Denominator: = Dividend Yield Dividend yield Barco Kyan 0% 2A Prof Mar Ratio 2A Tot Asset 2A Ret on Tot Turn Assets 2A Ret On Com Stock 2A Price Earn Ratio 2A Div Yield Req 2B Identify which company's stock you would recommend as the better investment. The better investment
