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 $ 18,500 $ Accounts receivable, net 39,400 Current notes receivable (trade) 10,000 Merchandise inventory 84,440 Prepaid expenses 5,500 Plant assets, net 340,000 Total assets $ 497,840 $ 32,000 55,400 7,800 136,500 7,400 312,400 551,500 $ Liabilities and Equity Current liabilities Long-term notes payable Common stock, $5 par value Retained earnings Total liabilities and equity 60,340 $ 81,800 220,000 135, 700 497,840 $ 102,300 103,000 226,000 120, 200 551,500 $ Data from the current year's income statement Sales $ 810,000 $ Cost of goods sold 593,100 Interest expense 8,000 Income tax expense 15,569 Net income 193,331 Basic earnings per share 4.39 Cash dividends per share 3.77 901,200 630,500 18,000 24,879 227,821 5.04 4.02 $ Beginning-of-year balance sheet data Accounts receivable, net Current notes receivable (trade) Merchandise inventory Total assets Common stock, $5 par value Retained earnings 31,800 $ 0 61,600 438,000 220,000 108,249 53,200 0 115,400 412,500 226,000 74,083 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 share and each company's stock can be purchased at $85 per share, compute their (e) price- earnings ratios and (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. Complete this question by entering your answers in the tabs below. 2A Pro Marg Ratio 2A Tot Asset Turn 2A Ret on Tot Assets 2A Ret On Com Stock Equity 2A Price Earn Ratio 2A Div Yield Req 2B For both companies compute the profit margin ratio. (a) Profit Margin Ratio Company Choose Numerator: 1 Choose Denominator: / = Profit margin ratio Profit margin ratio 0 % Barco 1 = Kyan 1 0 % 2A Pro Marg Ratio 2A Tot Asset Turn > 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 share and each company's stock can be purchased at $85 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. Complete this question by entering your answers in the tabs below. 2A Pro Marg Ratio 2A Tot Asset Turn 2A Ret on Tot Assets 2A Ret On Com Stock Equity 2A Price Earn Ratio 2A Div Yield Req 2B For both companies compute the total asset turnover (b) Total Asset Turnover Company Choose Numerator: 1 Choose Denominator: Total Asset Turnover Total asset turnover 1 Barco / = 0 times Kyan / o times
