Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Summary information from the financial statements of two companies competing in the same industry follows. Kyan Company Barco Company Data from the current year-end balance

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Summary information from the financial statements of two companies competing in the same industry follows. Kyan Company Barco Company Data from the current year-end balance sheets Assets Cash 20,500 $ 32,000 Accounts receivable, net Current notes receivable (trade) Merchandise inventory 36,400 50,400 8,000 132,500 7,550 308,400 9,100 84,240 Prepaid expenses 5,300 Plant assets, net 320,000 Total assets 475,540 $ 538,850 S Liabilities and Equity 70,340 $ Current liabilities 93,300 Long-term notes payable Common stock, $5 par value Retained earnings 83,800 105,000 216,000 124,550 180,000 141,400 S Total liabilities and equity 475,540 $ 538,850 Data from the current year's income statement Sales 770,000$ 911,200 586,100 Cost of goods sold Interest expense 640,500 8,500 18,000 Income tax expense 14,800 25,155 Net income 227,545 160,600 Basic earnings per sha Cash dividends per share 4.46 5.27 3.74 3.94 Beginning-of-year balance sheet data Accounts receivable, net Current notes receivable (trade) Merchandise inventory 31,800 S 58,200 0 55,600 109,400 Total assets 378,000 362,500 Common stock, $5 par value Retained earnings 180,000 216,000 115,440 67,213 2A Ret On 2A Price Earn Ratio 2A Tot Asset Turn 2A Ret on Tot Req 2B 2A Pro Marg Ratio 2A Div Yield Com Stock Assets Equity For both companies compute the profit margin ratio. (a) Profit Margin Ratio Profit margin ratio Choose Denominator: Company Choose Numerator: Profit margin ratio 0% Barco 0 % yan / IIII 2A Ret On 2A Price Earn 2A Pro Marg 2A Ret on Tot 2A Tot Asset Req 2B 2A Div Yield Com Stock Ratio Turn Assets Ratio Equity For both companies compute the total asset turnover (b) Total Asset Turnover Total Asset Choose Denominator: Company Choose Numerator: Turnover Total asset turnover o times / Barco Kyan 0 times wwm 2A Ret On Com Stock Equity 2A Price Earn 2A Tot Asset 2A Ret on Tot 2A Pro Marg Req 2B 2A Div Yield Ratio Asses Turn Ratio For both companies compute the return on total assets. (c) Return on Total Assets Choose Denominator: Return on Total Assets Company Choose Numerator: Return on total assets Barco C Kyan III 2A Ret On Com Stock Equity 2A Pro Marg 2A Tot Asset 2A Ret on Tot 2A Price Earn Req 2B 2A Div Yield Ratio Turn Assets Ratio For both companies compute the return on common stockholders' equity. (d) Return on Common Stockholders' Equity Company Choose Numerator: / Choose Denominator =Return On Common Stockholders' Equity Return On common stockholders' equity Barco o % an 0% 2A Ret On Com Stock Equity 2A Pride Earn 2A Tot Asset 2A Ret on Tot 2A Pro Marg Req 2B 2A Div Yield Ratio Turn Assets Ratio Assuming that share and each company's stock can be purchased at $90 per share, compute their price-earnings ratios. (e) Price-Earnings Ratio Choose Denominator Price-Earnings Ratio Choose Numerator: Company Price-eamings ratio 0 times Barco 0l times - Kyan 2A Ret On 2A Price Earn 2A Ret on Tot 2A Pro Marg 2A Tot Asset Req 2B Com Stock Equity 2A DIv Yield Ratio Turn Assets Ratio Assuming that share and each company's stock can be purchased at $75 per share, compute their dividend yields. (f) Dividend Yield IChoose Denominator: Dividend Yield Company Choose Numerator: Dividend yield 0 % Barco 0% Kyan wwwwccccxi ww Complete this question by entering your ansv s in the tabs below. swers 2A Ret On Com Stock 2A Price Earn 2A Div Yield 2A Pro Marg Ratio 2A Tot Asset 2A Ret on Tot Req 2B Turn Assets Ratio Equity Identify which company's stock you would recommend as the better investment. The better investment

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Assurance And Auditing

Authors: Thomas Nelson

1st Edition

0170111342, 978-0170111348

More Books

Students also viewed these Accounting questions