Required information Problem 17-5A (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 Data from the current year's balance sheets income statement Assets Sales $760,000 $ 889,200 Cash $ 20,000 $ 32,000 Cost of goods sold 591,100 636,500 Accounts receivable, net 38,400 51,400 Interest expense 9,100 15,000 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 5,400 340,000 $ 488,640 $ 526,300 $ 62,340 $ 103,300 79,800 180,000 $ 488,640 $ 526,300 84,840 130,500 Income tax expense 14,608 24,548 7,000 Net income 145,192 213, 152 305,400 Basic earnings per share 4.03 4.52 Cash dividends per share 3.78 4.00 Beginning-of-year balance sheet data Accounts receivable, net 103,000 236,000 Merchandise inventory Total assets 166,500 84,000 Common stock, $5 par value Retained earnings $ 26,800 $ 55,200 59,600 107,400 448,000 422,500 180,000 236,000 157,388 59,648 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 $100 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. Answer is not complete. Complete this question by entering your answers in the tabs below. Turn 2A Prof Mar 2A Tot Asset 2A Ret on Tot Ratio Assets 2A Ret On Equity 2A Price Earn Ratio 2A Div Yield Req 2B For both companies compute the return on equity. (d) Company Barco Kyan Return On Equity Numerator: Denominator Net income Average total equity 145,192 / 213,152 = Return On Equity Return On equity 0 % 0 % 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 $100 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. Answer is not complete. 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 Assets Equity 2A Price Earn Ratio 2A Div Yield Req 2B Assuming that share and each company's stock can be purchased at $100 per share, compute their price-earnings ratios. Price-Earnings Ratio (e) Company Numerator: Denominator: Market price per common share Earnings per share Barco 4.03 Kyan 4.52 = Price-Earnings Ratio Price-earnings ratio times times 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 $100 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. Answer is not complete. Complete this question by entering your answers in the tabs below. 2A Prof Mar 2A Tot Asset 2A Ret on Tot Ratio Turn Assets 2A Ret On 2A Price Earn Equity Ratio 2A Div Yield Req 2B Assuming that each company's stock can be purchased at $100 per share, compute their dividend yields. (f) Dividend Yield Company Numerator: Denominator: Annual cash dividends per share Market price per share Barco Kyan 3.78 4.00 = Dividend Yield Dividend yield 0 % 0 %