Barco Company Kyan Company Barco Company Kyan Company Data from the current year
ID: 2473816 • Letter: B
Question
BarcoCompany Kyan
Company Barco
Company Kyan
Company Data from the current year-end balance sheets Data from the current year’s income statement Assets Sales $ 770,000 $ 880,200 Cash $ 19,500 $ 34,000 Cost of goods sold 585,100 632,500 Accounts receivable, net 37,400 57,400 Interest expense 7,900 13,000 Current notes receivable (trade) 9,100 7,200 Income tax expense 14,800 24,300 Merchandise inventory 84,440 132,500 Net income 162,200 210,400 Prepaid expenses 5,000 6,950 Basic earnings per share 4.51 5.11 Plant assets, net 290,000 304,400 Total assets $ 445,440 $ 542,450 Beginning-of-year balance sheet data Liabilities and Equity Accounts receivable, net $ 29,800 $ 54,200 Current liabilities $ 61,340 $ 93,300 Current notes receivable (trade) 0 0 Long-term notes payable 80,800 101,000 Merchandise inventory 55,600 107,400 Common stock, $5 par value 180,000 206,000 Total assets 398,000 382,500 Retained earnings 123,300 142,150 Common stock, $5 par value 180,000 206,000 Total liabilities and equity $ 445,440 $ 542,450 Retained earnings 98,300 93,600
For both companies compute the (a) profit margin ratio, (b) total asset turnover, (c) return on total assets, and (d) return on common stockholders’ equity. Assuming that each company paid cash dividends of $3.80 per share and each company’s stock can be purchased at $75 per share, compute their (e) price-earnings ratios and (f) dividend yields. 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 $ 770,000 $ 880,200 Cash $ 19,500 $ 34,000 Cost of goods sold 585,100 632,500 Accounts receivable, net 37,400 57,400 Interest expense 7,900 13,000 Current notes receivable (trade) 9,100 7,200 Income tax expense 14,800 24,300 Merchandise inventory 84,440 132,500 Net income 162,200 210,400 Prepaid expenses 5,000 6,950 Basic earnings per share 4.51 5.11 Plant assets, net 290,000 304,400 Total assets $ 445,440 $ 542,450 Beginning-of-year balance sheet data Liabilities and Equity Accounts receivable, net $ 29,800 $ 54,200 Current liabilities $ 61,340 $ 93,300 Current notes receivable (trade) 0 0 Long-term notes payable 80,800 101,000 Merchandise inventory 55,600 107,400 Common stock, $5 par value 180,000 206,000 Total assets 398,000 382,500 Retained earnings 123,300 142,150 Common stock, $5 par value 180,000 206,000 Total liabilities and equity $ 445,440 $ 542,450 Retained earnings 98,300 93,600
For both companies compute the (a) profit margin ratio, (b) total asset turnover, (c) return on total assets, and (d) return on common stockholders’ equity. Assuming that each company paid cash dividends of $3.80 per share and each company’s stock can be purchased at $75 per share, compute their (e) price-earnings ratios and (f) dividend yields.
Explanation / Answer
Barco company Kyan Company
a) Profit Margin Ratio ( Net Income/Net sales) 0.211 ( 162,200/770,000) 0.239 (210,400/880,200)
b)Total asset turnover ratio 1.73 times(770,000/445,440) 1.62 times(880,200/542,450)
( Net Sales / Total Asset)
c) Return on total Assets 0.385 ( 162,200/ 421,720) 0.455 (210,400/462,475)
( Net Income / Avg. Total Asset) 421,720 462,475
Avg. Total Asset = (Opening Asset + Closing Asset)/2 (398,000+445,440)/2 (382,500+542,450)/2
d) Return on Equity 0.558(162,200/290,800) 0.325(210,400/647,750)
( Net Income / Avg. Equity) 290,800 647,750
Avg. Equity = (Opening Equity + Closing Equity)/2 = (278,300 + 303,300)/2 (299,600+348,150)/2
Stakeholder's Equity = Common Stock + Retained earnings
E) Price earning ratio 16.63 times ( 75 / 4.51) 14.67 ( 75 / 5.11)
( Market price / Earning per Share)
d) dividend Yeild 0.0506 ( 3.80 / 75) 0.0506 (3.80 / 75)
( Cash Dividend per share / Market Price per Share)
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