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 balance sheets			Data from the current years income statement
Assets			Sales	$ 800,000	$ 887,200
Cash	$ 20,000	$ 33,000	Cost of goods sold	587,100	642,500
Accounts receivable, net	39,400	56,400	Interest expense	8,400	13,000
Merchandise inventory	84,340	130,500	Income tax expense	15,377	24,493
Prepaid expenses	5,200	7,050	Net income	189,123	207,207
Plant assets, net	350,000	312,400	Basic earnings per share	4.50	4.58
Total assets	$ 498,940	$ 539,350	Cash dividends per share	3.79	3.97
Liabilities and Equity			Beginning-of-year balance sheet data
Current liabilities	$ 65,340	$ 95,300	Accounts receivable, net	$ 31,800	$ 54,200
Long-term notes payable	84,800	103,000	Merchandise inventory	65,600	117,400
Common stock, $5 par value	210,000	226,000	Total assets	388,000	402,500
Retained earnings	138,800	115,050	Common stock, $5 par value	210,000	226,000
Total liabilities and equity	$ 498,940	$ 539,350	Retained earnings	108,857	87,287

Problem 17-5A (Algo) Part 2

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 companys stock can be purchased at $100 per share, compute their (e) price-earnings ratios and (f) dividend yields. 2b. Identify which companys stock you would recommend as the better investment.

Complete this question by entering your answers in the tabs below. 2A Prof Mar Ratio 2A Tot Asset Turn 2A Ret on Tot Assets 2A Ret On Equity 2A Price Earn Ratio 2A Div Yield Req 2B For both companies compute the profit margin ratio. (a) Profit Margin Ratio Denominator: Company Numerator: / = 1 = Profit margin ratio Profit margin ratio 0 % Barco 1 = Kyan = 0 % 2A Prof Mar Ratio 2A Tot Asset Turn 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 Total Asset Turnover (b) Company Numerator: 1 Denominator: = = Total Asset Turnover 1 = Total asset turnover Barco / = 0 times Kyan 1 = 0 times 2A Prof Mar Ratio 2A Tot Asset Turn 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. Return On Equity (d) Company Numerator: I Denominator = Return On Equity = II Return On equity Barco 1 II = 0 % Kyan 1 = 0 % 2A Prof Mar Ratio 2A Tot Asset Turn 2A Ret on Tot Assets 2A Ret On Equity 2A Price Earn Ratio 2A Div Yield Req 2B Assuming that share and each company's stock can be purchased at $100 per share, compute their price-earnings ratios. (e) Company Price-Earnings Ratio Denominator: Numerator: 1 = / = Price-Earnings Ratio Price-earnings ratio 0 times Barco = Kyan 1 = Il 0 times 2A Prof Mar Ratio 2A Tot Asset 2A Ret on Tot Turn Assets 2A Ret On Equity 2A Price Earn Ratio 2A Div Yield Req 2B Assuming that each company's stock can be purchased at $100 per share, compute their dividend yields. Dividend Yield (f) Company Numerator: / Denominator: = Dividend Yield = II Dividend yield Barco 1 = II 0 % Kyan 1 = = 0 %