2a. For both companies compute the (a) profit margin ratio, (b) total asset turnover, (c) return on total assets, and (d) return on commonstockholders' equity. Assuming that each company's stock can be purchased at $75 per share, compute their (e) price-earnings ratiosand (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 MarRatio2A Price EarnRatio2A Tot Asset 2A Ret on Tot2A Ret On2A Div YieldReq 2BTurnAssetsCom StockFor both companies compute the return on common stockholders' equity.(d)Return On Common Stockholders' EquityCompanyChoose Numerator:Choose DenominatorReturn On Common Stockholders' EquityNet incomePreferred dividendsI [Average common stockholders' equityReturn on common stockholders' equityBarco162,200180000 /0 %Кyan210,400206000 /0 %< 2A Ret on Tot Assets2A Price Earn Ratio> Summary information from the financial statements of two companies competing in the same industry follows.BarcoCompanyData from the current year-end balance sheetsКyanCompanyBarcoCompanyData from the current year's income statementКyanCompanyAssetsCashAccounts receivable, netMerchandise inventory$770,000 $880, 200585,1007,90014,800162,2004.51Sales$ 19,500 $ 34,00046,50084,4405,000290,000632,500CostInterest expenseIncome tax expenseNet incomegoods sold13,00024,30064,600132,5006,950304,400210,400Prepaid expensesPlant assets, netBasic earnings per share5.11Total assets$445,440 $542,450Cash dividends per share3.813.93Liabilities and EquityCurrent liabilitiesLong-term notes payableCommon stock, $5 par valueRetained earnings$ 61,340 $ 93,300101,000206.000Beginning-of-year balance sheet dataAccounts receivable, netMerchandise inventoryTotal assetsCommon stock, $5 par value$ 29,800 $ 54,20055,600398,000180,00080,800180,000123,300107,400382,500142,150206, 000Total liabilities and equity$445,440 $542,450Retained earnings98,30093,600

Accounting ratios are those ratios which simplifies the financial information or compares the two…

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.

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter24: Analysis Of Financial Statements

Section: Chapter Questions

Problem 9SPB

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