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	$ 881,200
Cash	$ 21,500	$ 31,000	Cost of goods sold	591,100	650,500
Accounts receivable, net	40,400	58,400	Interest expense	7,900	12,000
Merchandise inventory	84,540	132,500	Income tax expense	15,377	24,327
Prepaid expenses	6,200	7,350	Net income	185,623	194,373
Plant assets, net	280,000	305,400	Basic earnings per share	4.88	4.12
Total assets	$ 432,640	$ 534,650	Cash dividends per share	3.81	3.93
Liabilities and Equity			Beginning-of-year balance sheet data
Current liabilities	$ 63,340	$ 100,300	Accounts receivable, net	$ 31,800	$ 55,200
Long-term notes payable	84,800	111,000	Merchandise inventory	55,600	107,400
Common stock, $5 par value	190,000	236,000	Total assets	398,000	362,500
Retained earnings	94,500	87,350	Common stock, $5 par value	190,000	236,000
Total liabilities and equity	$ 432,640	$ 534,650	Retained earnings	53,657	78,473

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 $85 per share, compute their (e) price-earnings ratios and (f) dividend yields.

2b. Identify which companys stock you would recommend as the better investment.