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summary information from the financial statements of two companies competing in the same industry follows. ryan company and barco company :for both companies compute profit margin ratio

Sagot :

The maximum critical economic declaration for most people of users is likely to be the profits assertion, The financial statements of two corporations competing within an identical enterprise.

Profit Margin Ratio = Net Income / Net Sales

Barco Company = $149,492 / $760,000 = 0.196

Kyan Company = $233,738 / $904,200 = 0.258

Total Asset Turnover = Net Sales / Average Total Asset

Barco Company = 760,000 / ((428,000 + 481,140)/ 2) = 1.67

Kyan Company = 904,200 / ((402,500 + 543,350)/ 2) = 1.91

Return on Total Asset = EBIT / Average Total Asset

Barco Company = 171,900 / ((428,000 + 481,140)/ 2) = 0.38

Kyan Company = 271,700 / ((402,500 + 543,350)/ 2) = 0.57

Return on Common Share = Net Income / Average common shareholder's Equity.

Barco Company = 149,492 / (( 170,000 + 170,000) / 2) = 0.88

Kyan Company = 233,738 / ((196,000 + 196,000) /2) = 1.19

Price Earning Ratio = Price Per Share / Earning Per Share

Barco Company = 80 / 4.40 = 18.18

Kyan Company = 80 / 5.96 = 13.42

Dividend Yield Ratio = Annual Dividend / Price Per Share

Barco Company = 3.80 / 80 = 0.047

Kyan Company = 3.96 / 80 = 0.049.

Kyan Company Stocks are better for investment as it has an ideal price Earning Ratio, which means it is not overpriced, a better Dividend Yield Ratio as compared to Barco company and by looking at the other Ratios, we can see it has better fundamentals than the latter one.

Learn more about The financial statements here:-https://brainly.com/question/27361580

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