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 $ 21,000 $30,000 Accounts receivable, net 38, 400 59,400 Current notes receivable (trade) 9,300 8,200 Merchandise inventory 84,740 138,500 Prepaid expenses 5,200 7,700 Plant assets, net 310,000 308,400 Total assets $468, 640 $552,200 Barco Company Data from the current year's income statement Sales $770,000 Cost of goods sold 992, 100 Interest expense 8.400 Income tax expense 14,800 Net income 154,700 Basic earnings per share 3.68 Cash dividends per share 3.77 $ 27,800 Liabilities and Equity Current liabilities Long-term notes payable Common stock, $5 par value Retained earnings Total liabilities and equity $ 60,340 $ 93,300 34,800 101,000 210,000 210,000 216,000 216,000 113,500 141,900 $468,640 $552,200 Beginning-of-year balance sheet data Accounts receivable, net Current notes receivable (trade) Merchandise inventory Total assets Common stock, $5 par value Retained earnings 159.600 428,000 210,000 117,140 2a. For both companies compute the () profit margin ratio, (b) total asset turnover (return on total assets, and (d) return on common stockholders' equity. Assuming that share and each company's stock can be purchased at $95 per share, compute their (e) price-earnings ratios and (y dividend yields. (Do not round Intermediate calculations. Round your answers to 2 decimal places.) 2b. Identity which company's stock you would recommend as the better investment Barco Company nt year-end balance sheets Kyan Company net vable (trade) ory $ 21,000 $ 30,000 38,400 59,400 9,3008 , 200 84,740 138,500 5,200 7,700 310,000 308, 400 $468, 640 $552, 200 Barco Kyan Company Company Data from the current year's income statement Sales $770,000 $901,200 Cost of goods sold 592,100 638,500 Interest expense 8,400 19,000 Income tax expense 14,800 24,879 Net income 154,700 218,821 Basic earnings per share 13.68 5.07 Cash dividends per share 3.77 3.96 $ 27,800 $ 56,200 uity Beginning-of-year balance sheet data Accounts receivable, net Current notes receivable (trade) Merchandise inventory Total assets Common stock, $5 par value Retained earnings $ 60,340 $ 93,300 84,800 101,000 210,000 216,000 113,500 141,900 $ 468,640 $552,200 yable ar value 159,600 428,000 310,000 117,140 109,400 402.500 216,000 94,151 and equity For both companies compute the profit margin ratio. Profit Margin Ratio Choose Denominator Company Choose Numerator: Profit margin ratio Profit margin ratio 01% 0 % Barco Kyan (b) Total Asset Turnover Choose Denominator: Company Choose Numerator: = Total Asset Turnover Total asset turnover 0 times 0 times 12 Barco Kyan (c) Return on Total Assets 7 Choose Denominator: Company Choose Numerator: Return on Total Assets Return on total assets Barco Kyan (d) Company Choose Numerator: Return On Common Stockholders' Equity Choose Denominator - Return On Common Stockholders - Return On common stockholders' equity Barco 0 % Kyan (e) Price-Earnings Ratio Choose Denominator: Company Choose Numerator: = Price-Earnings Ratio = Price-earnings ratio Otimes times Barco Kyan
