Summary information from the financial statements of two companies competing in the same industry follows. Barco Kyan Company Company Data from the current year-end balance sheets Assets Cash $ 18,500 $ 30,000 Accounts receivable, net 38,400 54,400 Current notes receivable (trade) 9,400 8,400 Merchandise inventory 84,940 132,500 Prepaid expenses 5,700 7,500 Plant assets, net 280,000 310,400 Total assets $436,940 $543,200 Barco Kyan Company Company Data from the current year's income statement Sales $ 780,000 $902,200 Cost of goods sold 586,100 640, 500 Interest expense 7,500 10,000 Income tax expense 14,992 24,907 Net Income 171,408 226,793 Basic earnings per share 4.08 5.25 Cash dividends per share 3.77 3.91 Liabilities and Equity Current liabilities Long-term notes payable Common stock, $5 poe value Retained earnings Total liabilities and equity $ 66,340 $ 97,300 84,800 103,000 210,000 216,000 25, 1100 126,900 $436,940 $543,200 Beginning-of-year balance sheet data Accounts receivable, net Current notes receivable (trade) Merchandise inventory Total assets Common stock, 55 par value Retained earnings $ 30,800 $ 52,200 0 D 53,600 109.00 418,000 392,500 210,000 216,000 62,732 69,019 2a. For both companies compute the () profit margin ratio. (b) total asset turnover, (return on total assets, and (c) return on common stockholders' equity Assuming that share and each company's stock can be purchased at $75 per share, compute their (e) price- earnings ratios and (dividend yields. (Do not round Intermediate calculations. Round your answers to 2 decimal places.) 2b. Identify which company's stock you would recommend as the better investment. 2A Price Earn Ratio 2A Div Yield Req 2B 2A Ret On 2A Pro Marg 2A Tot Asset 2A Ret on Tot Ratio Turn Assets Com Stock Equity For both companies compute the profit margin ratio. Profit Margin Ratio Choose Denominator: CompanyChoose Numerator: / Profit margin ratio = Profit margin ratio % Barco 1 = Kyan % 2A Price Earn Ratio 2A Div Yield 2A Ret On 2A Pro Marg2A Tot Asset 2A Ret on Tot Com Stock Ratio Turn Assets Equity 2A Tot Asset Turn For both companies compute the total asset turnover Req 2B (b) Company Choose Numerator: Total Asset Turnover 1 Choose Denominator: / - Total Asset Turnover Total asset turnover Barco times Kyan / times 2A Price Earn Ratio 2A Div Yield 2A Ret On 2A Pro Marg 2A Tot Asset 2A Retfon Tot Com Stock Ratio Turn Assets Equity For both companies compute the return on total assets. Req 2B Return on Total Assets (c) Company Choose Numerator: Return on Total Assets 1 Choose Denominator: / Return on total assets Barco % Kyan % Reg 2B 2A Ret On 2A Pro Marg ZA Tot Asset 2A Ret on Tot 2A Price Earn Ratio Com Stock Assets 2A Div Yield Turn Ratio Eduity For both companies compute the return on common stockholders' equity. (d) Company Choose Numerator: Return On Common Stockholders' Equity Choose Denominator = Return On Common Stockholders' Equity = Return On common stockholders' equity 1 Barco 96 96 Kyan ZA Pro Marg Ratio ZA Tot Asset Turn 2A Ret on Tot Assets 2A Ret On Com Stock Equity 2A Pofce Earn Ratio 2A Div Yield Req 2B Assuming that share and each company's stock can be purchased at $75 per share, compute their price-earnings ratios. (0) Company Price-Earnings Ratio 1 Choose Denominator: Choose Numerator: - Price Earnings Ratio Price-earnings ratio times times Barco Kyan 21 Div Yield 2A Ret On 2A Pro Marg 2A Tot Asset 2A Ret on Tot 2A Price Earn Com Stock Ratio Reg 28 Turn Assets Ratio Equity Assuming that share and each company's stock can be purchased at $75 per share, compute their dividend yields. (6 Company Dividend Yield 1 Choose Denominator: Choose Numerator: Dividend Yield Dividend yield % Barco % Kyan 2A Ret On 2A Pro Marg 2A Tot Asset 2A Ret on Tot ZA Price Earn Com Stock Ratio Assets 2A Div Yield Turn Ratio Equity Identify which company's stock you would recommend as the better investment. Req 2B The better investment
