Required information [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 Barco Company Kyan Company $ 19,000 39,400 84,640 5,100 $ 35,000 53,400 132,500 7,300 340,000 307,400 $ 488,140 $ 535,600 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 $ 71,340 84,800 210,000 122,000 $ 97,300 107,000 196,000 Total assets 135,300 Total liabilities and equity $ 488,140 $ 535,600 Common stock, $5 par value Retained earnings Barco Company $ 810,000 590,100 8,000 15,569 196,331 4.67 3.77 Kyan Company $905,200 630,500 14,000 24,990 235,710 6.01 3.96 $ 26,800 $ 52,200 61,600 107,400 398,000 392,500 196,000 210,000 84,009 54,822 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 $70 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.
Required information [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 Barco Company Kyan Company $ 19,000 39,400 84,640 5,100 $ 35,000 53,400 132,500 7,300 340,000 307,400 $ 488,140 $ 535,600 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 $ 71,340 84,800 210,000 122,000 $ 97,300 107,000 196,000 Total assets 135,300 Total liabilities and equity $ 488,140 $ 535,600 Common stock, $5 par value Retained earnings Barco Company $ 810,000 590,100 8,000 15,569 196,331 4.67 3.77 Kyan Company $905,200 630,500 14,000 24,990 235,710 6.01 3.96 $ 26,800 $ 52,200 61,600 107,400 398,000 392,500 196,000 210,000 84,009 54,822 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 $70 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.
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter12: Fainancial Statement Analysis
Section: Chapter Questions
Problem 92PSA: A Preparation of Ratios Refer to the financial statements for Burch Industries in Problem 12-89A and...
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