![subject](/tpl/images/cats/mat.png)
Mathematics, 16.07.2021 05:30 annikafischer
Shown below is the liabilities and stockholders’ equity section of the balance sheet for Novak Company and Splish Company. Each has assets totaling $4,327,000.
Novak Co.
Current liabilities: $285,000
Long-term debt, 9%: 1,220,000
Common stock ($20 par): 2,090,000
Retained earnings (Cash dividends, $229,000): 732,000
Total: $4,327,000
Splish Co.
Current Liabilities: $855,000
Common stock ($20 par): 2,740,000
Retained earnings (Cash dividends, $333,000): 732,000
Total: $4,327,000
For the year, each company has earned the same income before interest and taxes.
Novak:
Income before interest and taxes: $1,250,000
Interest expense: 109,800
Equals: 1,140,200
Income taxes (20%): 228,040
Net income: $912,160
Splish Co.:
Income before interest and taxes: $1,250,000
Interest expense: 0
Equals: 1,250,000
Income taxes (20%): 250,000
Net income: $1,000,000
At year-end, the market price of Novak’s stock was $101 per share, and Splish’s was $63.50. Assume balance sheet amounts are representative for the entire year.
a) Calculate the return on total assets? Which company is more profitable in terms of return on total assets?
b) Calculate the return on common stock equity? Which company is more profitable in terms of return on common stockholders’ equity?
c) Calculate the Net income per share. Which company has the greater net income per share of stock? Neither company issued or reacquired shares during the year.
d1) From the point of view of net income, is it advantageous to the stockholders of Novak Co. to have the long-term debt outstanding?
e) What is the book value per share for each company?
![ansver](/tpl/images/cats/User.png)
Answers: 3
![](/tpl/images/ask_question.png)
![](/tpl/images/ask_question_mob.png)
Other questions on the subject: Mathematics
![image](/tpl/images/cats/mat.png)
![image](/tpl/images/cats/mat.png)
Mathematics, 21.06.2019 14:40, timothycarter342
You call the pizza store and find out that eachpizza has 12 slices. you expect 16 people tocome, and you estimate each person will eat 3slices. how many pizzas should you order
Answers: 2
![image](/tpl/images/cats/mat.png)
Mathematics, 21.06.2019 15:30, WhiteWinterRose
Which equation represents the line that passes through the points and (4, 10) and (2, 7)? y = 3/2x - 11y = 3/2x +4y = - 3/2x + 19y = - 3/2x + 16
Answers: 2
![image](/tpl/images/cats/mat.png)
Mathematics, 21.06.2019 17:00, jadejordan8888
What properties allow transformation to be used as a problem solving tool
Answers: 1
You know the right answer?
Shown below is the liabilities and stockholders’ equity section of the balance sheet for Novak Compa...
Questions in other subjects:
![Konu](/tpl/images/cats/mat.png)
![Konu](/tpl/images/cats/es.png)
![Konu](/tpl/images/cats/ekonomika.png)
![Konu](/tpl/images/cats/ekonomika.png)
![Konu](/tpl/images/cats/es.png)
![Konu](/tpl/images/cats/ekonomika.png)
![Konu](/tpl/images/cats/fizika.png)
![Konu](/tpl/images/cats/fizika.png)
![Konu](/tpl/images/cats/fizika.png)