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 $ 790,000 $ 925,200 Cash $ 19,500 $ 32,000 Cost of goods sold 584,100 634,500 Accounts receivable, net 38,400 60,400 Interest expense 9,200 11,000 Merchandise inventory 84,740 132,500 Income tax expense 15,185 25,542 Prepaid expenses 5,700 7,550 Net income 181,515 254,158 Plant assets, net 310,000 305,400 Basic earnings per share 5 04 5 62 Total assets $ 458,340 $ 537,850 Cash dividends per share 3 70 3 96 Liabilities and Equity Beginning of year balance sheet data Current liabilities $ 68,340 $ 97,300 Accounts receivable, net $ 31,800 $ 51,200 Long term notes payable 84,800 105,000 Merchandise inventory 59,600 111,400 Common stock, $5 par value 180,000 226,000 Total assets 378,000 392,500 Retained earnings 125,200 109,550 Common stock, $5 par value 180,000 226,000 Total liabilities and equity $ 458,340 $ 537,850 Retained earnings 76,885 34,384 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 $90 per share, compute their ( e ) price earnings ratios and ( f ) dividend yields 2b Identify which companys stock you would recommend as the better investment For both companies compute the profit margin ratio (a) Profit Margin Ratio Company Numerator Denominator Profit margin ratio Profit margin ratio Barco 0 Kyan 0 For both companies compute the total asset turnover (b) Total Asset Turnover Company Numerator Denominator Total Asset Turnover Total asset turnover Barco 0 times Kyan 0 times For both companies compute the return on total assets (c) Return on Total Assets Company Numerator Denominator Return on Total Assets Return on total assets Barco 0 Kyan 0 For both companies compute the return on equity (d) Return On Equity Company Numerator Denominator Return On Equity Return On equity Barco 0 Kyan 0

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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

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	$ 790,000	$ 925,200
Cash	$ 19,500	$ 32,000	Cost of goods sold	584,100	634,500
Accounts receivable, net	38,400	60,400	Interest expense	9,200	11,000
Merchandise inventory	84,740	132,500	Income tax expense	15,185	25,542
Prepaid expenses	5,700	7,550	Net income	181,515	254,158
Plant assets, net	310,000	305,400	Basic earnings per share	5.04	5.62
Total assets	$ 458,340	$ 537,850	Cash dividends per share	3.70	3.96
Liabilities and Equity			Beginning-of-year balance sheet data
Current liabilities	$ 68,340	$ 97,300	Accounts receivable, net	$ 31,800	$ 51,200
Long-term notes payable	84,800	105,000	Merchandise inventory	59,600	111,400
Common stock, $5 par value	180,000	226,000	Total assets	378,000	392,500
Retained earnings	125,200	109,550	Common stock, $5 par value	180,000	226,000
Total liabilities and equity	$ 458,340	$ 537,850	Retained earnings	76,885	34,384

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 $90 per share, compute their (e) price-earnings ratios and (f) dividend yields. 2b. Identify which companys stock you would recommend as the better investment.

For both companies compute the profit margin ratio.