Summary information from the financial statements of two companies competing in the same industry follows. Kyan Company Barco Company 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 $ 19,000 36,400 84,640 5,700 360,000 $ 505,740 $ 33,000 57,400 130,500 7,450 307,400 $ 535,750 $ 100,300 $ 61,340 81,800 220,000 142,600 101,000 206,000 128,450 $ 505,740 $ 535,750 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 data Accounts receivable, net Merchandise inventory Total assets Common stock, $5 par value Retained earnings $ 760,000 586,100 7,700 14,608 151,592 3.45 3.79 $ 25,800 55,600 448,000 220,000 157,768 Kyan Company $ 909,200 648,500 19,000 25,100 216,600 5.26 3.95 $ 58,200 113,400 412,500 206,000 74,590 2a. For both companies compute the (a) profit margin ratio, (b) total asset turnover, (c) return on total assets, and (d) return on equity.
Summary information from the financial statements of two companies competing in the same industry follows. Kyan Company Barco Company 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 $ 19,000 36,400 84,640 5,700 360,000 $ 505,740 $ 33,000 57,400 130,500 7,450 307,400 $ 535,750 $ 100,300 $ 61,340 81,800 220,000 142,600 101,000 206,000 128,450 $ 505,740 $ 535,750 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 data Accounts receivable, net Merchandise inventory Total assets Common stock, $5 par value Retained earnings $ 760,000 586,100 7,700 14,608 151,592 3.45 3.79 $ 25,800 55,600 448,000 220,000 157,768 Kyan Company $ 909,200 648,500 19,000 25,100 216,600 5.26 3.95 $ 58,200 113,400 412,500 206,000 74,590 2a. For both companies compute the (a) profit margin ratio, (b) total asset turnover, (c) return on total assets, and (d) return on equity.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:2A Prof Mar 2A Tot Asset 2A Ret on Tot 2A Ret On
Ratio
Turn
Assets
Equity
For both companies compute the profit margin ratio.
Profit Margin Ratio
Denominator:
(a)
Company
Barco
Kyan
Numerator:
/
I
I
2A Price Earn
Ratio
=
=
=
=
2A Div Yield
Profit margin ratio
Profit margin ratio
%
%
Req 2B
![[The following information applies to the questions displayed below.]
Summary information from the financial statements of two companies competing in the same industry follows.
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
$ 19,000
36,400
84,640
5,700
360,000
$ 505,740
Kyan
Company
$ 33,000
57,400
130,500
7,450
307,400
$ 535,750
$ 100,300
$ 61,340
81,800
220,000
142,600
101,000
206,000
128,450
$ 505,740 $ 535,750
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
$760,000
586, 100
7,700
14,608
151,592
3.45
3.79
$ 25,800
55,600
448,000
220,000
157,768
Kyan Company
$ 909,200
648,500
19,000
25,100
216,600
5.26
3.95
$ 58,200
113,400
412,500
206,000
74,590
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 $85 per share, compute their (e) price-earnings ratios and (f) dividend
yields.
2b. Identify which company's stock you would recommend as the better investment.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5a9aa902-655f-41dd-a6be-bec2f32ef4ca%2F711d78f0-8f35-4b4d-a120-c01127624e3c%2Fiyntdq_processed.png&w=3840&q=75)
Transcribed Image Text:[The following information applies to the questions displayed below.]
Summary information from the financial statements of two companies competing in the same industry follows.
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
$ 19,000
36,400
84,640
5,700
360,000
$ 505,740
Kyan
Company
$ 33,000
57,400
130,500
7,450
307,400
$ 535,750
$ 100,300
$ 61,340
81,800
220,000
142,600
101,000
206,000
128,450
$ 505,740 $ 535,750
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
$760,000
586, 100
7,700
14,608
151,592
3.45
3.79
$ 25,800
55,600
448,000
220,000
157,768
Kyan Company
$ 909,200
648,500
19,000
25,100
216,600
5.26
3.95
$ 58,200
113,400
412,500
206,000
74,590
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 $85 per share, compute their (e) price-earnings ratios and (f) dividend
yields.
2b. Identify which company's stock you would recommend as the better investment.
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