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Summary information from the financial statements of two companies competing in the same industry follows.

	Barco Company			Kyan Company					Barco Company			Kyan Company
Data from the current year-end balance sheets								Data from the current years income statement
Assets								Sales	$	770,000		$	911,200
Cash	$	21,000		$	33,000			Cost of goods sold		593,100			636,500
Accounts receivable, net		33,400			58,400			Interest expense		8,400			14,000
Merchandise inventory		84,340			132,500			Income tax expense		14,800			25,155
Prepaid expenses		5,400			7,650			Net income		153,700			235,545
Plant assets, net		290,000			310,400			Basic earnings per share		3.66			5.45
Total assets	$	434,140		$	541,950			Cash dividends per share		3.76			3.92
Liabilities and Equity								Beginning-of-year balance sheet data
Current liabilities	$	65,340		$	95,300			Accounts receivable, net	$	28,800		$	53,200
Long-term notes payable		81,800			107,000			Merchandise inventory		61,600			117,400
Common stock, $5 par value		210,000			216,000			Total assets		448,000			412,500
Retained earnings		77,000			123,650			Common stock, $5 par value		210,000			216,000
Total liabilities and equity	$	434,140		$	541,950			Retained earnings		81,220			57,449

2a. 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 companys stock can be purchased at $75 per share, compute their (e) price-earnings ratios and (f) dividend yields. (Do not round intermediate calculations. Round your answers to 2 decimal places.) 2b. Identify which companys stock you would recommend as the better investment.

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