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 year's income statement Assets Sales $ 780,000 $ 896,200 Cash $ 21,500 $ 32,000 Cost of goods sold 591,100 Accounts receivable, net 38,400 51,400 Merchandise inventory Prepaid expenses Plant assets, net Total assets Liabilities and Equity Current liabilities Long-term notes payable Common stock, $5 par value Retained earnings Total liabilities and equity 84,740 130,500 6,100 350,000 7,300 Interest expense Income tax expense Net income 8,000 634,500 11,000 14,992 24,741 165,908 225,959 310,400 Basic earnings per share 4.37 4.79 $ 500,740 $ 531,600 $ 69,340 84,800 $ 92,300 Accounts receivable, net 109,000 Cash dividends per share Beginning-of-year balance sheet data Merchandise inventory 3.73 3.97 $ 30,800 $ 57,200 57,600 109,400 190,000 156,600 236,000 Total assets 378,000 392,500 94,300 $ 500,740 $ 531,600 Common stock, $5 par value Retained earnings 190,000 236,000 132,432 55,725 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 company's stock can be purchased at $95 per share, compute their (e) price-earnings ratios and (1) dividend yields. 2b. Identify which company's stock you would recommend as the better investment. Complete this question by entering your answers in the tabs below. Turn 2A Prof Mar 2A Tot Asset 2A Ret on Tot 2A Ret On Ratio For both companies compute the profit margin ratio. 2A Price Earn 2A Div Yield Req 2B Assets Equity Ratio (a) Company Barco Kyan Numerator: 1 Profit Margin Ratio Denominator: Profit margin ratio Profit margin ratio = 0% = 0% 2A Prof Mar 2A Tot Asset 2A Ret on Tot Ratio Turn Assets 2A Ret On Equity 2A Price Earn Ratio 2A Div Yield Req 2B For both companies compute the total asset turnover (b) Company Numerator: Total Asset Turnover Denominator: Barco Kyan = Total Asset Turnover = Total asset turnover 0 times 0 times < 2A Prof Mar Ratio 2A Ret on Tot Assets > 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 For both companies compute the return on total assets. (c) Company Numerator: Return on Total Assets Denominator: Barco Kyan Return on Total Assets = Return on total assets = 0% 0% < 2A Tot Asset Turn 2A Ret On Equity > 2A Prof Mar Ratio 2A Tot Asset 2A Ret on Tot 2A Ret On Turn Assets Equity 2A Price Earn Ratio 2A Div Yield Req 2B For both companies compute the return on equity. (d) Company Numerator: Barco Kyan Return On Equity Denominator = Return On Equity = Return On equity = 0 % 0 % < 2A Ret on Tot Assets 2A Price Earn Ratio > Turn 2A Prof Mar 2A Tot Asset 2A Ret on Tot 2A Ret On Ratio Assets Equity 2A Price Earn 2A Div Yield Ratio Req 2B Assuming that share and each company's stock can be purchased at $95 per share, compute their price-earnings ratios. (e) Company Barco Kyan Numerator: Price-Earnings Ratio Denominator: Price-Earnings Ratio = Price-earnings ratio = 0 times 0 times < 2A Ret On Equity 2A Div Yield > Turn 2A Prof Mar 2A Tot Asset 2A Ret on Tot Ratio Assets 2A Ret On 2A Price Earn 2A Div Yield Equity Ratio Req 2B Assuming that each company's stock can be purchased at $95 per share, compute their dividend yields. (f) Company Barco Kyan Numerator: Dividend Yield Denominator: Dividend Yield = Dividend yield = 0% = 0% < 2A Price Earn Ratio Req 2B >