Summary information from the financial statements of two companies competing in the same industry follows. Barco CompanyKyan Company Barco CompanyKyan CompanyData from the current year-end balance sheets Data from the current year’s income statement Assets Sales$ 780,000$ 883,200Cash$ 19,000$ 37,000Cost of goods sold589,100644,500Accounts receivable, net37,40054,400Interest expense8,00012,000Merchandise inventory84,340136,500Income tax expense14,99224,383Prepaid expenses5,8007,350Net income167,908202,317Plant assets, net370,000310,400Basic earnings per share4.664.68Total assets$ 516,540$ 545,650Cash dividends per share3.723.99Liabilities and Equity Beginning-of-year balance sheet data Current liabilities$ 67,340$ 97,300Accounts receivable, net$ 28,800$ 50,200Long-term notes payable86,800111,000Merchandise inventory59,600113,400Common stock, $5 par value180,000216,000Total assets438,000392,500Retained earnings182,400121,350Common stock, $5 par value180,000216,000Total liabilities and equity$ 516,540$ 545,650Retained earnings148,41291,401 Required:2a. Ret on Tot Assets2a. Ret on Equity Complete this question by entering your answers in the tabs below.2A Prof Mar2A Tot Asset2A Ret on Tot2A Ret On2A Price Earn2A Div YieldReq 2BRatioTurnAssetsEquityRatioFor both companies compute the return on equity.(d)Return On EquityCompanyNumerator:DenominatorReturn On Equity%3DReturn On equityBarco| Кyan%3D2A Ret on Tot Assets2A Price Earn Ratio<>II Complete this question by entering your answers in the tabs below.2A Prof Mar2A Tot Asset2A Ret on Tot2A Ret On2A Price Earn2A Div YieldReq 2BRatioTurnAssetsEquityRatioFor both companies compute the return on total assets.(c)Return on Total AssetsCompanyNumerator:Denominator:Return on Total Assets%3DReturn on total assets%3DBarco%3D|Кyan2A Tot Asset Turn2A Ret On Equity<>

Profitability ratios refer to a type of financial ratio that is used to evaluate an organization’s ability to generate profits in comparison to its revenue, costs, assets, or equity. The common types of profitability ratios are the profit margin, return on assets, and return on equity. The return on assets ratio measures how profitable an organization is, in comparison to its total assets. The return on equity ratio assesses how profitable an organization is, relative to its total equity. Compute the average total assets of Company B: Average Total Assets of Company B=Balance at the beginning of the year + Balance at the end of the year2=$438,000+$516,5402=$477,270 Calculate the average total assets of Company K: Average Total Assets of Company K=Balance at the beginning of the year + Balance at the end of the year2=$392,500+$545,6502=$469,075 Compute the return on total assets of Company B and Company K: The formula snip is as follows: The result of the above is as follows:Compute the average stockholder's equity of Company B and Company K: The formula snip is as follows: The result of the above is as follows: Compute the return on equity of Company B and Company K: The formula snip is as follows: The result of the above is as follows:Final Answer: The return on total assets of: Company B is 35.18% Company K is 43.13% The return on total equity of: Company B is 48.61% Company K is 62.76%

Answered: Summary information from the financial…

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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Question

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 balance sheets			Data from the current year’s income statement
Assets			Sales	$ 780,000	$ 883,200
Cash	$ 19,000	$ 37,000	Cost of goods sold	589,100	644,500
Accounts receivable, net	37,400	54,400	Interest expense	8,000	12,000
Merchandise inventory	84,340	136,500	Income tax expense	14,992	24,383
Prepaid expenses	5,800	7,350	Net income	167,908	202,317
Plant assets, net	370,000	310,400	Basic earnings per share	4.66	4.68
Total assets	$ 516,540	$ 545,650	Cash dividends per share	3.72	3.99
Liabilities and Equity			Beginning-of-year balance sheet data
Current liabilities	$ 67,340	$ 97,300	Accounts receivable, net	$ 28,800	$ 50,200
Long-term notes payable	86,800	111,000	Merchandise inventory	59,600	113,400
Common stock, $5 par value	180,000	216,000	Total assets	438,000	392,500
Retained earnings	182,400	121,350	Common stock, $5 par value	180,000	216,000
Total liabilities and equity	$ 516,540	$ 545,650	Retained earnings	148,412	91,401

Required:

2a. Ret on Tot Assets

2a. Ret on Equity

Complete this question by entering your answers in the tabs below.
2A Prof Mar
2A Tot Asset
2A Ret on Tot
2A Ret On
2A Price Earn
2A Div Yield
Req 2B
Ratio
Turn
Assets
Equity
Ratio
For both companies compute the return on equity.
(d)
Return On Equity
Company
Numerator:
Denominator
Return On Equity
%3D
Return On equity
Barco
| Кyan
%3D
2A Ret on Tot Assets
2A Price Earn Ratio
<>
II

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