Problem 13-5A (Algo) Comparative ratio analysis Part 2

Problem 13-5A (Algo) 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. Barco Company Kyan Company Barco Company Kyan Company Data from the current year-end balance sheets Assets Cash Accounts receivable, net 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 $ 21,000 34,400 84,340 5,700 280,000 $ 425,440 $ 810,000 594,100 7,600 15,569 192,731 6.02 $ 31,000 56,400 138,500 7,800 311,400 $ 545, 100 Data from the current year's income statement Sales Cost of goods sold Interest expense Income tax expense Net income Basic earnings per share Cash dividends per share Beginning-of-year balance sheet data Accounts receivable, net Merchandise inventory Total assets Common stock, $5 par value Retained earnings $ 890,200 646,500 13,000 24,576 206,124 5.26 4.01 3.77 $ 61,340 86,800 160,000 117,300 $ 425,440 $ 97,300 109,000 196,000 142,800 $ 545,100 $ 27,890 59,600 428,090 160,000 45,209 $ 50,200 107,400 412,500 196,000 93,868 roblem 13-5A (Algo) Part 2 Problem 13-5A (Algo) Part 2 2a. For both companies compute the (a) profit margin ratio. (b) total asset turnover, (a return on total assets, and (d) return on equity. Assuming that each company's stock can be purchased at $75 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. 2A Prof Mar Ratio 2A Tot Asset 2A Ret on Tot Turn Assets 2A Ret On Equity 2A Price Earn Ratio 2A Div Yield Reg 2B For both companies compute the profit margin ratio. (a) Company Profit Margin Ratio Denominator: Numerator: 1 Profit margin ratio Profit margin ratio Barco 7 % Kyan 7 (2A Prot Mar Ratio 2A Tot Asset Turn > 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 Equity 2A Price Earn Ratio 2A Div Yield Req 2B For both companies compute the total asset turnover (b) Total Asset Turnover Denominator: Company Numerator: = Total Asset Turnover Total asset turnover Barco 1 times Kyan times 2A Prof Mar Ratio 2A Tot Asset 2A Ret on Tot Turn Assets 2A Ret On Equity 2A Price Earn Ratio 2A Div Yield Reg 2B For both companies compute the return on total assets. Return on Total Assets (c) Company Il Numerator: 1 Denominator: Return on Total Assets 1 11 Return on total assets Barco / 11 % % Kyan 1 11 2A Prof Mar Ratio 2A Tot Asset Turn 2A Ret on Tot Assets 2A Ret On Equity 2A Price Earn Ratio 2A Div Yield Req 2B For both companies compute the return on equity. (d) Company Return On Equity Denominator Numerator: Return On Equity / Return On equity Barco 1 - % Kyan 1 % 2A Prof Mar Ratio 2A Tot Asset Turn 2A Ret on Tot Assets 2A Ret On Equity 2A Price Earn Ratio 2A Div Yield Reg 2B Assuming that share and each company's stock can be purchased at $75 per share, compute their price-earnings ratios. (e) Price-Earnings Ratio Denominator: Company Numerator: 1 Price-Earnings Ratio Price-earnings ratio Barco times Kyan times 2A Prof Mar Ratio 2A Tot Asset Turn 2A Ret on Tot Assets 2A Ret On Equity 2A Price Earn Ratio 2A Div Yield Reg 2B Assuming that each company's stock can be purchased at $75 per share, compute their dividend yields. (0 Company Dividend Yield Denominator: Numerator: Dividend Yield Dividend yield Barco % Kyan % 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 Equity 2A Price Earn Ratio 2A Div Yield Reg 2B Identify which company's stock you would recommend as the better investment. The better investment ( 2A Div Yield Reg 2 >