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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 Barco Company $ 22,500 39,400 84,840 5,800 360,000 $ 512,540 Kyan Company $ 33,000 52,400 130,500 7,350 311,400 $ 534,650 $ 68,340 $ 101,300 115,000 236,000 82,350 $ 512,540 $ 534,650 82,800 170,000 191,400 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 datal Accounts receivable, net Merchandise inventory Total assets Common stock, $5 par value Retained earnings Barco Company $ 790,000 591,100 8,800 15,185 174,915 5.14 3.72 $ 27,800 55,600 438,000 170,000 142,965 Kyan Company $ 884,200 632,500 16,000 24,410 211,290 4.48 3.97 $ 50,200 107,400 382,500 236,000 58,444 Problem 13-5A (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 $90 per share, compute their (e) price-earnings ratios and (5) dividend yields. 2b. Identify which company's stock you would recommend as the better investment.

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 Barco Company $ 22,500 39,400 84,840 5,800 360,000 $ 512,540 Kyan Company $ 33,000 52,400 130,500 7,350 311,400 $ 534,650 $ 68,340 $ 101,300 115,000 236,000 82,350 $ 512,540 $ 534,650 82,800 170,000 191,400 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 datal Accounts receivable, net Merchandise inventory Total assets Common stock, $5 par value Retained earnings Barco Company $ 790,000 591,100 8,800 15,185 174,915 5.14 3.72 $ 27,800 55,600 438,000 170,000 142,965 Kyan Company $ 884,200 632,500 16,000 24,410 211,290 4.48 3.97 $ 50,200 107,400 382,500 236,000 58,444 Problem 13-5A (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 $90 per share, compute their (e) price-earnings ratios and (5) dividend yields. 2b. Identify which company's stock you would recommend as the better investment.

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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### Problem 13-5A (Algo) Part 2 #### Company Financial Data Below is the comparison data for Barco Company and Kyan Company based on their current year-end balance sheets and income statements. #### Data from the Current Year-End Balance Sheets | **Accounts** | **Barco Company** | **Kyan Company** | |------------------------------|------------------:|-----------------:| | **Assets** | | | | Cash | $22,500 | $33,000 | | Accounts receivable, net | $39,400 | $52,400 | | Merchandise inventory | $84,840 | $130,500 | | Prepaid expenses | $5,000 | $7,350 | | Plant assets, net | $360,800 | $311,400 | | **Total assets** | $512,540 | $534,650 | | | | | | **Liabilities and Equity** | | | | Current liabilities | $68,340 | $101,300 | | Long-term notes payable | $82,800 | $115,000 | | Common stock, $5 par value | $170,000 | $236,000 | | Retained earnings | $191,400 | $82,350 | | **Total liabilities and equity** | $512,540 | $534,650 | #### Data from the Current-Year’s Income Statement | **Description** | **Barco Company** | **Kyan Company** | |-----------------------------|------------------:|-----------------:| | Sales | $790,000 | $884,200 | | Cost of goods sold | $591,100 | $632,500 | | Interest expense | $8,800 | $16,000 | | Income tax expense | $15,185 | $24,410 | | Net income | $174,915 | $211,290 | | Basic earnings per share | 5.14 | 4.48 | | Cash dividends per share | 3.72 | 3.97 | #### Beginning-of-Year Balance Sheet Data | **Accounts** | **Bar
Transcribed Image Text:### Problem 13-5A (Algo) Part 2 #### Company Financial Data Below is the comparison data for Barco Company and Kyan Company based on their current year-end balance sheets and income statements. #### Data from the Current Year-End Balance Sheets | **Accounts** | **Barco Company** | **Kyan Company** | |------------------------------|------------------:|-----------------:| | **Assets** | | | | Cash | $22,500 | $33,000 | | Accounts receivable, net | $39,400 | $52,400 | | Merchandise inventory | $84,840 | $130,500 | | Prepaid expenses | $5,000 | $7,350 | | Plant assets, net | $360,800 | $311,400 | | **Total assets** | $512,540 | $534,650 | | | | | | **Liabilities and Equity** | | | | Current liabilities | $68,340 | $101,300 | | Long-term notes payable | $82,800 | $115,000 | | Common stock, $5 par value | $170,000 | $236,000 | | Retained earnings | $191,400 | $82,350 | | **Total liabilities and equity** | $512,540 | $534,650 | #### Data from the Current-Year’s Income Statement | **Description** | **Barco Company** | **Kyan Company** | |-----------------------------|------------------:|-----------------:| | Sales | $790,000 | $884,200 | | Cost of goods sold | $591,100 | $632,500 | | Interest expense | $8,800 | $16,000 | | Income tax expense | $15,185 | $24,410 | | Net income | $174,915 | $211,290 | | Basic earnings per share | 5.14 | 4.48 | | Cash dividends per share | 3.72 | 3.97 | #### Beginning-of-Year Balance Sheet Data | **Accounts** | **Bar
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