Question

Problem 13-5A Comparative ratio analysis LO A1, P3

[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		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		Cash dividends per share		3.81		3.93
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 share and each company’s 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.)

Answer is complete but not entirely correct.

(d) Return On Common Stockholders' Equity Company Choose Numerator: / Choose Denominator = Return On Common Stockholders' Equity Net incomeselected answer correct - Preferred dividendsselected answer correct / Average common stockholders' equityselected answer correct = Return on common stockholders' equity Barco $162,200selected answer correct - $0selected answer correct / $290,780selected answer incorrect = 55.8 % Kyan $210,400selected answer correct - $0selected answer correct / $323,908selected answer incorrect = 65.0 %

I need help calculation the average common stockholders equity because the answer I got (shown above) is wrong

Answer 1

	Barco Company	Kyan Company
Beginning:
Common stock, $5 par value	180000	206000
Retained earnings	98300	93600
Beginning common stockholders' equity	278300	299600
Ending:
Common stock, $5 par value	180000	206000
Retained earnings	123300	142150
Ending common stockholders' equity	303300	348150
Average common stockholders' equity:
Barco Company	290800	=(278300+303300)/2
Kyan Company	323875	=(299600+348150)/2
(d)	Return On Common Stockholders' Equity
Company	Choose Numerator:			/	Choose Denominator	=	Return On Common Stockholders' Equity
	Net income	-	Preferred dividends	/	Average common stockholders' equity	=	Return on common stockholders' equity
Barco	$162,200	-	$0	/	$290,800	=	55.8%
Kyan	$210,400	-	$0	/	$323,875	=	65.0%