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2a. For both companies compute the (a) profit margin ratio, (b) total asset turnover, (c) return on total assets,

2a. For both companies compute the (a) profit margin ratio, (b) total asset turnover, (c) return on total assets,

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 (f 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 Ret On Com Stock 2A Prof Mar 2A Ret on Tot 2A Tot Asset Turn 2A Price Earn Ratio Reg 2B 2A Div Yield Ratio Assets Assuming that share and each company's stock can be purchased at $75 per share, compute their price-earnings ratios. (e) Price-Earnings Ratio Company Choose Numerator: Choose Denominator: Price-Earnings Ratio Market price per common share I Earnings per share Price-Earnings Ratio Barco 4.51 times = Кyan 5.11 times < 2A Ret On Com Stock 2A Div Yield >
Transcribed Image Text: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 (f 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 Ret On Com Stock 2A Prof Mar 2A Ret on Tot 2A Tot Asset Turn 2A Price Earn Ratio Reg 2B 2A Div Yield Ratio Assets Assuming that share and each company's stock can be purchased at $75 per share, compute their price-earnings ratios. (e) Price-Earnings Ratio Company Choose Numerator: Choose Denominator: Price-Earnings Ratio Market price per common share I Earnings per share Price-Earnings Ratio Barco 4.51 times = Кyan 5.11 times < 2A Ret On Com Stock 2A Div Yield >
Summary information from the financial statements of two companies competing in the same industry follows. Barco Company Data from the current year-end balance sheets Кyan Company Barco Company Data from the current year's income statement Кyan Company Assets Cash Accounts receivable, net Merchandise inventory $770,000 $880, 200 585,100 7,900 14,800 162,200 4.51 Sales $ 19,500 $ 34,000 46,500 84,440 5,000 290,000 632,500 Cost Interest expense Income tax expense Net income goods sold 13,000 24,300 64,600 132,500 6,950 304,400 210,400 Prepaid expenses Plant assets, net Basic earnings per share 5.11 Total assets $445,440 $542,450 Cash dividends per share 3.81 3.93 Liabilities and Equity Current liabilities Long-term notes payable Common stock, $5 par value Retained earnings $ 61,340 $ 93,300 101,000 206.000 Beginning-of-year balance sheet data Accounts receivable, net Merchandise inventory Total assets Common stock, $5 par value $ 29,800 $ 54,200 55,600 398,000 180,000 80,800 180,000 123,300 107,400 382,500 142,150 206, 000 Total liabilities and equity $445,440 $542,450 Retained earnings 98,300 93,600
Transcribed Image Text:Summary information from the financial statements of two companies competing in the same industry follows. Barco Company Data from the current year-end balance sheets Кyan Company Barco Company Data from the current year's income statement Кyan Company Assets Cash Accounts receivable, net Merchandise inventory $770,000 $880, 200 585,100 7,900 14,800 162,200 4.51 Sales $ 19,500 $ 34,000 46,500 84,440 5,000 290,000 632,500 Cost Interest expense Income tax expense Net income goods sold 13,000 24,300 64,600 132,500 6,950 304,400 210,400 Prepaid expenses Plant assets, net Basic earnings per share 5.11 Total assets $445,440 $542,450 Cash dividends per share 3.81 3.93 Liabilities and Equity Current liabilities Long-term notes payable Common stock, $5 par value Retained earnings $ 61,340 $ 93,300 101,000 206.000 Beginning-of-year balance sheet data Accounts receivable, net Merchandise inventory Total assets Common stock, $5 par value $ 29,800 $ 54,200 55,600 398,000 180,000 80,800 180,000 123,300 107,400 382,500 142,150 206, 000 Total liabilities and equity $445,440 $542,450 Retained earnings 98,300 93,600
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