Required information [The following information applies to the questions display

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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. Barco Company Company Kyan Barco Kyan Company Company Data from the current year-end balance sheets Assets Cash Accounts receivable, net Current notes receivable (trade) Merchandise inventory Prepaid expenses Plant assets, net Total assets Data from the current year's income statement Sales $790,000 $880,200 590,100 648,500 8,900 11,000 15,185 24,300 175,815 196,400 35 4.01 22,000 $ 31,000 Cost of goods sold 33,400 60,400 Interest expense 10,000 84,440 138,500 Net income 8,600 Income tax expense 5.49 3.73 6,200 7,850 Basic earnings per share 320,000 310,400 Cash dividends per share $476,040 $556,750 Beginning-of-year balance sheet data Accounts receivable, net Liabilities and Equity Current liabilities Long-term notes payable Common stock, $5 par value Retained earnings Total liabilities and equity 25,800$52,200 65, 340 $103,300 Current notes receivable (trade) 79,800 107,000 Merchandise inventory 160,000 226,000 Total assets 170,900 120,450 Common stock, $5 par value 476,040 $556,750 Retained earnings 65,600 115,400 448,000 402,500 160,000 226,000 114,445 105,302 2a. For both companies compute the (a) profit margin ratio, (b) total asset turnover, (c return on total assets, and (a) return on common stockholders' equity. Assuming that share and each company's stock can be purchased at $95 per share, compute their (e) price- earnings ratios and ( dividend yields. (Do not round intermediate calculations. Round your answers to 2 decimal places.) 2b. ldentify which company's stock you would recommend as the better investment. Complete this question by entering your answers in the tabs below

Explanation / Answer

Return on Common Stock holder Equity Company Net Income - Preferred Dividend / Average Common Shareholder's Equity = Return on Common Stockholder's Equity Barco $175,815 0 $302,672.50 58% Kyan $196,400 0 $338,876.00 58% Barco Company Kyan Company Ending Balance of Common Shareholder's Equity ($160000+$170900)= $330900 ($226000+$120450)=$346450 Beginning Balance of Common Shareholder's Equity ($160000+$114445)= $274445 ($226000+$105302)=331302 Average Common Stockholdr's Equity $302,672.50 $338,876.00

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