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Required information Problem 17-5A Comparative ratio analysis LO P3 [The following information applies to the questions displayed below.) Summary information from the financial statements of two companies competing in the same industry follows. Kyan Company Kyan Company Barco Company Data from the current year-end balance sheets Assets Cash $ 19,500 Accounts receivable, net 46,500 Merchandise inventory 84, 440 Prepaid expenses 5,000 Plant assets, net 290,000 Total assets $445, 440 $ 34,000 64, 600 132,500 6,950 304, 400 $542, 450 Barco Company Data from the current year's income statement Sales $770,000 Cost of goods sold 585, 100 Interest expense 7,900 Income tax expense 14, 800 Net income 162,200 Basic earnings per share 4.51 Cash dividends per share 3. 81 $880, 200 632, 500 13,000 24, 300 210, 400 5.11 3.93 Liabilities and Equity Current liabilities Long-term notes payable Common stock, $5 par value Retained earnings Total liabilities and equity $ 61, 340 80, 800 180,000 123, 300 $445, 440 $ 93, 300 101,000 206,000 142, 150 $542, 450 Beginning-of-year balance sheet data Accounts receivable, net Merchandise inventory Total assets Common stock, $5 par value Retained earnings $ 29,800 55, 600 398,000 180,000 98,300 $ 54,200 107, 400 382, 500 206,000 93,500 Problem 17-5A 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 common stockholders' equity. Assuming that 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. Problem 17-5A 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 common stockholders' equity. Assuming that 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. Complete this question by entering your answers in the tabs below. 2A Prof Mar Ratio 2A Tot Asset 2A Ret on Tot Turn Assets 2A Ret On Com Stock 2A Price Earn Ratio 2A Div Yield Req 2B For both companies compute the return on common stockholders' equity. (d) Company Net income Barco Kyan Choose Numerator: - Preferred dividends 162,200 - 210,400 - 1 Return On Common Stockholders' Equity. Choose Denominator = Return On Common Stockholders' Equity Average common stockholders' equity = Return on common stockholders' equity 290,800 = 55.8 % 3 23,875 = 65.0 % Problem 17-5A 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 common stockholders' equity. Assuming that each company's stock can be purchased at $75 per share, compute their (e) price-earnings ratios and (1) 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. Complete this question by entering your answers in the tabs below. 2A Prof Mar Ratio 2A Tot Asset Turn 2A Ret on Tot Assets 2A Ret On Com Stock 2A Price Earn Ratio 2A Div Yield Req 2B Identify which company's stock you would recommend as the better investment. The better investment Required information Problem 17-5A Comparative ratio analysis LO P3 [The following information applies to the questions displayed below.) Summary information from the financial statements of two companies competing in the same industry follows. Kyan Company Kyan Company Barco Company Data from the current year-end balance sheets Assets Cash $ 19,500 Accounts receivable, net 46,500 Merchandise inventory 84, 440 Prepaid expenses 5,000 Plant assets, net 290,000 Total assets $445, 440 $ 34,000 64, 600 132,500 6,950 304, 400 $542, 450 Barco Company Data from the current year's income statement Sales $770,000 Cost of goods sold 585, 100 Interest expense 7,900 Income tax expense 14, 800 Net income 162,200 Basic earnings per share 4.51 Cash dividends per share 3. 81 $880, 200 632, 500 13,000 24, 300 210, 400 5.11 3.93 Liabilities and Equity Current liabilities Long-term notes payable Common stock, $5 par value Retained earnings Total liabilities and equity $ 61, 340 80, 800 180,000 123, 300 $445, 440 $ 93, 300 101,000 206,000 142, 150 $542, 450 Beginning-of-year balance sheet data Accounts receivable, net Merchandise inventory Total assets Common stock, $5 par value Retained earnings $ 29,800 55, 600 398,000 180,000 98,300 $ 54,200 107, 400 382, 500 206,000 93,500 Problem 17-5A 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 common stockholders' equity. Assuming that 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. Problem 17-5A 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 common stockholders' equity. Assuming that 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. Complete this question by entering your answers in the tabs below. 2A Prof Mar Ratio 2A Tot Asset 2A Ret on Tot Turn Assets 2A Ret On Com Stock 2A Price Earn Ratio 2A Div Yield Req 2B For both companies compute the return on common stockholders' equity. (d) Company Net income Barco Kyan Choose Numerator: - Preferred dividends 162,200 - 210,400 - 1 Return On Common Stockholders' Equity. Choose Denominator = Return On Common Stockholders' Equity Average common stockholders' equity = Return on common stockholders' equity 290,800 = 55.8 % 3 23,875 = 65.0 % Problem 17-5A 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 common stockholders' equity. Assuming that each company's stock can be purchased at $75 per share, compute their (e) price-earnings ratios and (1) 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. Complete this question by entering your answers in the tabs below. 2A Prof Mar Ratio 2A Tot Asset Turn 2A Ret on Tot Assets 2A Ret On Com Stock 2A Price Earn Ratio 2A Div Yield Req 2B Identify which company's stock you would recommend as the better investment. The better investment