For both companies compute the (a) profit margin ratio, (b) total asset turnover, (c) return on total assets, and (d) return on commor ckholders' equity. Assuming that each company's stock can be purchased at $75 per share, compute their (e) price-earnings ratios 1 (f) dividend yields. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Identify which company's stock you would recommend as the better investment.
For both companies compute the (a) profit margin ratio, (b) total asset turnover, (c) return on total assets, and (d) return on commor ckholders' equity. Assuming that each company's stock can be purchased at $75 per share, compute their (e) price-earnings ratios 1 (f) dividend yields. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Identify which company's stock you would recommend as the better investment.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter16: Financial Statement Analysis
Section: Chapter Questions
Problem 4PB
Related questions
Question
![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 Prof Mar
Ratio
2A Price Earn
Ratio
2A Tot Asset 2A Ret on Tot
2A Ret On
2A Div Yield
Req 2B
Turn
Assets
Com Stock
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
Net income
Preferred dividends
I [Average common stockholders' equity
Return on common stockholders' equity
Barco
162,200
180000 /
0 %
Кyan
210,400
206000 /
0 %
< 2A Ret on Tot Assets
2A Price Earn Ratio
>](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb85689b6-cb2b-4208-a44f-c2cf1e339d68%2F4305312a-b2ca-43cc-b342-06b87eba8d6e%2Fxk5j6rc_processed.png&w=3840&q=75)
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 Prof Mar
Ratio
2A Price Earn
Ratio
2A Tot Asset 2A Ret on Tot
2A Ret On
2A Div Yield
Req 2B
Turn
Assets
Com Stock
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
Net income
Preferred dividends
I [Average common stockholders' equity
Return on common stockholders' equity
Barco
162,200
180000 /
0 %
Кyan
210,400
206000 /
0 %
< 2A Ret on Tot Assets
2A Price Earn Ratio
>
![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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb85689b6-cb2b-4208-a44f-c2cf1e339d68%2F4305312a-b2ca-43cc-b342-06b87eba8d6e%2Feabpvkv_processed.png&w=3840&q=75)
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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