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	$	780,000		$	919,200
Cash	$	21,000		$	37,000			Cost of goods sold		588,100			642,500
Accounts receivable, net		39,400			54,400			Interest expense		8,100			19,000
Current notes receivable (trade)		9,200			7,200			Income tax expense		14,992			25,376
Merchandise inventory		84,340			132,500			Net income		168,808			232,324
Prepaid expenses		5,500			7,600			Basic earnings per share		4.22			4.92
Plant assets, net		340,000			310,400			Cash dividends per share		3.72			3.95
Total assets	$	499,440		$	549,100
								Beginning-of-year balance sheet data
Liabilities and Equity								Accounts receivable, net	$	27,800		$	51,200
Current liabilities	$	61,340		$	92,300			Current notes receivable (trade)		0			0
Long-term notes payable		80,800			105,000			Merchandise inventory		65,600			109,400
Common stock, $5 par value		200,000			236,000			Total assets		418,000			382,500
Retained earnings		157,300			115,800			Common stock, $5 par value		200,000			236,000
Total liabilities and equity	$	499,440		$	549,100			Retained earnings		137,292			69,916

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 companys stock can be purchased at $90 per share, compute their (e) price-earnings ratios and (f) dividend yields. (Do not round intermediate calculations. Round your answers to 2 decimal places.) 2b. Identify which companys stock you would recommend as the better investment.

(a) Company Profit Margin Ratio Choose Denominator: Net sales 781,519 X 918,277 X Profit margin ratio Profit margin ratio Choose Numerator: Net income 168,808 232,324 = Barco 21.6 Kyan 25.3 % Total Asset Turnover . (b) Company Choose i Numerator: Net sales i 780,000 1 919,2001 Choose Denominator: Average total assets 458,720 = 456,800 X = Total Asset Turnover Total asset turnover - 1.7 times 2.0 times Barco Kyan Return on Total Assets . (c) Company Choose Denominator: Return on Total Assets Choose Numerator: Net income 1 Average total assets Return on total assets Barco 155.047 33.8 458,720 456,800 X Kyan 193,226 X 42.3 % (d) Return On Common Stockholders' Equity Company Return On Common Stockholders' Equity Return On common stockholders' equity Choose Numerator: Net Preferred income dividends 168,808 232,324 - Choose Denominator Average common stockholders' equity 347,296 328,858 Barco 4,884 47.2 Kyan 15,278 X 66.0 % Company Choose Numerator: Market price per common share Price-Earnings Ratio Choose Denominator: Earnings per share Price-Earnings Ratio Price-earnings ratio 1 17.8 times Barco Kyan 90 90 5.06 5.92 X 15.2 times Dividend Yield Company Dividend Yield Choose Numerator: Annual cash dividends per share 4.50 X 1 Choose Denominator: Market price per share Dividend yield Barco 90 E 5.0 Kyan 4.77 X 90 5.3 %