Required information Problem 13-5A 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. Barco Kyan Barco Kyan Company Company Company Company Data from the current year-end balance Data from the current year's income sheets statement Assets Sales $770,000 $880,200 Cash $ 19,500 $ 34,000 Cost of goods sold 585,100 632,500 Accounts receivable, 46,500 64,600 Interest expense 7,900 13,000 net Merchandise inventory 84,440 132,500 Income tax expense 14,800 24,300 Prepaid expenses 5,000 6,950 Net income 162,200 210,400 Plant assets, net 290,000 304,400 Basic earnings per share 4.51 5.11 Total assets $445,440 $542,450 Cash dividends per 3.81 3.93 share 1 Liabilities and Equity Beginning-of-year balance sheet data Current liabilities $ 61,340 $ 93,300 Accounts receivable, $ 29,800 $ 54,400 net Long-term notes payable 80,800 101,000 Merchandise inventory 55,600 107,400 Common stock, $5 par value 180,000 206,000 Total assets 398,800 382,500 Retained earnings Common stock, $5 par 123,300 142, 150 value 180,000 206,000 Total liabilities and $445,440 $542, 450 Retained earnings equity 98,300 93,00 Problem 13-5A Part 2 2a. For both companies compute the (a) profit margin ratio, (b) total asset turnover, (d) 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. Earn 2A Prof 2A Tot 2A Ret on 2A Ret 2A Price 2A Div Tot Mar Ratio Asset On Com Yield Req 2B For both companies compute the profit margin ratio. Profit Margin Ratio Choose Company 1 Choose Denominator: = Profit margin Numerator: ratio Profit margin 1 ratio Barco % Kyan 2A Prof Mar Ratio 2A Tot Asset Turn > 2A Prof 2A Tot 2A Ret on 2A Ret 2A Price 2A Div Mar Ratio Asset Tot On Com Req 2B Earn Yield For both companies compute the total asset turnover (b) Total Asset Turnover Choose Total Asset Company Numerator: Choose Denominator: = Turnover Total asset 1 turnover Barco times Kyan times 2A Prof 2A Tot 2A Ret on 2A Ret 2A Price 2A Div Mar Ratio Asset Req 2B Tot On Com Earn Yield For both companies compute the return on total assets. (c) Return on Total Assets Choose Company Return on Total Numerator: Choose Denominator: Assets Return on total assets Barco % Kyan 7 % 2A Prof 2A Tot 2A Ret on 2A Ret 2A Price 2A Div Reg 2B Mar Ratio Asset Tot On Com Earn Yield For both companies compute the return on total assets. (c) Return on Total Assets Choose Company Return on Total Choose Denominator: = Numerator: Assets Return on total assets Barco % Kyan % 1 2A Prof 2A Tot 2A Ret on 2A Ret 2A Price 2A Div Mar Ratio Asset On Com Tot Req 2B Earn Yield For both companies compute the return on common stockholders' equity. (d) Return On Common Stockholders' Equity Company Choose Numerator: Choose Denominator Return On Common Stockholders' Equity Return on common stockholders' equity Barco Kyan % % Earn 2A Prof 2A Tot 2A Ret on 2A Ret 2A Price 2A Div Mar Ratio Asset Tot On Com Yield Req 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 Choose Choose Numerator: Company Price-Earnings Denominator: Ratio / = Price-Earnings Ratio Barco / times Kyan times 2A Prof 2A Tot 2A Ret on 2A Ret 2A Price 2A Div Mar Ratio Asset Req 2B Tot On Com Earn Yield Assuming that each company's stock can be purchased at $75 per share, compute their dividend yields. (0) Dividend Yield Company Choose Numerator: Dividend I Choose Denominator: Yield Dividend Yield Barco 1 % Kyan % 2A Prof 2A Tot 2A Ret on 2A Ret 2A Ret 2A Price 2A Div Mar Ratio Asset Tot On Com Earn Req 2B Yield Identify which company's stock you would recommend as the better investment. The better investment