[The following information applies to the questions displayed below.] Summary Information from the financial statements of two companies competing in the same industry follows. Barco Company Kyan Company Barco Kyan Company Company Data from the current year-end balance sheets Data from the current year's income statement Assets Sales $ 780,000 Prepaid expenses Cash $ 22,500 $ 34,000 Accounts receivable, net 48,488 59,480 Marchandise inventory 84,743 138,520 Plant assets, net 5,780 330,000 7,800 312,480 Basic earnings per share Total assets $ 483,348 $ 544,180 Cash dividends per share Current liabilities Liabilities and Equity Long-term notes payable Common stock, $5 par value Retained earnings $ 64,340 83,800 190,000 145,200 $ 94,300 Accounts receivable, net 103,000 Beginning-of-year balance sheet data Merchandise inventory 206,000 Total assets 140,830 Total liabilities and equity $ 483,349 $ 544,190 Common stock, $5 par value Retained earnings Cost of goods sold Interest expense Income tax expanse Net income 586,100 $ 886,200 650,500 7,900 14,000 14,992 24,465 171,008 197,235 4.50 4.79 3.71 3.98 $ 32,800 $ 50,200 61,600 107,400 418,000 382,500 190,000 206,000 115,172 107,541 Problem 17-5A (Algo) Part 2 28. For both companies compute the (o) 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 $95 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.
[The following information applies to the questions displayed below.] Summary Information from the financial statements of two companies competing in the same industry follows. Barco Company Kyan Company Barco Kyan Company Company Data from the current year-end balance sheets Data from the current year's income statement Assets Sales $ 780,000 Prepaid expenses Cash $ 22,500 $ 34,000 Accounts receivable, net 48,488 59,480 Marchandise inventory 84,743 138,520 Plant assets, net 5,780 330,000 7,800 312,480 Basic earnings per share Total assets $ 483,348 $ 544,180 Cash dividends per share Current liabilities Liabilities and Equity Long-term notes payable Common stock, $5 par value Retained earnings $ 64,340 83,800 190,000 145,200 $ 94,300 Accounts receivable, net 103,000 Beginning-of-year balance sheet data Merchandise inventory 206,000 Total assets 140,830 Total liabilities and equity $ 483,349 $ 544,190 Common stock, $5 par value Retained earnings Cost of goods sold Interest expense Income tax expanse Net income 586,100 $ 886,200 650,500 7,900 14,000 14,992 24,465 171,008 197,235 4.50 4.79 3.71 3.98 $ 32,800 $ 50,200 61,600 107,400 418,000 382,500 190,000 206,000 115,172 107,541 Problem 17-5A (Algo) Part 2 28. For both companies compute the (o) 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 $95 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Required Information
Problem 17-5A (Algo) Comparative ratio analysis LO P3
[The following information applies to the questions displayed below.]
Summary information from the financial statements of two companies competing in the same industry follows.
Barco
Kyan
Company
Company
Barco
Company
Kyan Company
Data from the current year-end
balance sheets
Data from the current year's income
statement
Assets
Sales
Prepaid expenses
Cash
$ 22,500
$ 34,000
Accounts receivable, net
40,400
59,400
Merchandise inventory
84,743
130,500
Plant assets, net
5,700
330,000
312,400
Basic earnings per share
Total assets
$ 483,348
$ 544,180
Cash dividends per share
Current liabilities
Liabilities and Equity
Long-term notes payable.
Common stock, $5 par value
Retained earnings
Total liabilities and equity
$ 483,343 $ 544,100
$ 64,340
$ 94,300
Accounts receivable, net
83,800
190,000
103,000
206,000
Beginning-of-year balance sheet data
Merchandise inventory
Total assets
145,200
140,800
Common stock, $5 par value
Retained earnings
7,800
Cost of goods sold
Interest expense
Income tax expense
Net income
$780,000
586,100
7,900
$ 886,200
650,500
14,000
14,992
24,465
171,008
197,235
4.50
4.79
3.71
3.98
$ 32,800
$ 50,200
61,600
107,400
418,000
382,500
190,000
206,000
115,172
107,541
Problem 17-5A (Algo) Part 2
2a. For both companies compute the (a) profit margin ratio, (b) total asset turnover, (c) return on total assets, and (c) return on equity.
Assuming that each company's stock can be purchased at $95 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.
Complete this question by entering your answers in the tabs below.
Turn
2A Prof Mar 2A Tot Asset 2A Ret on Tot 2A Ret On
Ratio
Assets
Equity
2A Price Earn
Ratio
2A Div Yield
Req 28
For both companies compute the profit margin ratio.
(a)
Company
Barco
Kyani
Numerator:
Profit Margin Ratio
Denominator:
=
Profit margin ratio
=
Profit margin ratio
96
=
%
2A Prof Mar Ratio
2A Tot Asset Turn >](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcdc329d9-e0a3-405d-887d-57980429d048%2F98659591-1f0e-4dfe-b66e-eb8cb7ae83ed%2Fvqjrpxq_processed.png&w=3840&q=75)
Transcribed Image Text:Required Information
Problem 17-5A (Algo) Comparative ratio analysis LO P3
[The following information applies to the questions displayed below.]
Summary information from the financial statements of two companies competing in the same industry follows.
Barco
Kyan
Company
Company
Barco
Company
Kyan Company
Data from the current year-end
balance sheets
Data from the current year's income
statement
Assets
Sales
Prepaid expenses
Cash
$ 22,500
$ 34,000
Accounts receivable, net
40,400
59,400
Merchandise inventory
84,743
130,500
Plant assets, net
5,700
330,000
312,400
Basic earnings per share
Total assets
$ 483,348
$ 544,180
Cash dividends per share
Current liabilities
Liabilities and Equity
Long-term notes payable.
Common stock, $5 par value
Retained earnings
Total liabilities and equity
$ 483,343 $ 544,100
$ 64,340
$ 94,300
Accounts receivable, net
83,800
190,000
103,000
206,000
Beginning-of-year balance sheet data
Merchandise inventory
Total assets
145,200
140,800
Common stock, $5 par value
Retained earnings
7,800
Cost of goods sold
Interest expense
Income tax expense
Net income
$780,000
586,100
7,900
$ 886,200
650,500
14,000
14,992
24,465
171,008
197,235
4.50
4.79
3.71
3.98
$ 32,800
$ 50,200
61,600
107,400
418,000
382,500
190,000
206,000
115,172
107,541
Problem 17-5A (Algo) Part 2
2a. For both companies compute the (a) profit margin ratio, (b) total asset turnover, (c) return on total assets, and (c) return on equity.
Assuming that each company's stock can be purchased at $95 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.
Complete this question by entering your answers in the tabs below.
Turn
2A Prof Mar 2A Tot Asset 2A Ret on Tot 2A Ret On
Ratio
Assets
Equity
2A Price Earn
Ratio
2A Div Yield
Req 28
For both companies compute the profit margin ratio.
(a)
Company
Barco
Kyani
Numerator:
Profit Margin Ratio
Denominator:
=
Profit margin ratio
=
Profit margin ratio
96
=
%
2A Prof Mar Ratio
2A Tot Asset Turn >
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