Hi, please help! Please provide detailed solution of how you get this answer! An

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Hi, please help! Please provide detailed solution of how you get this answer! Answer the question only in the case you can make sure you will answer them all! Thanks!

The selection choice for all the three sub-questions is Sheffield company/Tamarisk company.

Exercise 15-19 Shown below is the liabilities and stockholders' equity section of the balance sheet for Sheffield Company and Tamarisk Company. Each has assets totaling $4,279,000 Sheffield Co. TamariskCo Current liabilities Long-term debt, 9% Common stock ($20 par) Retained earnings (Cash dividends, $198,000) $324,000 1,210,000 2,000,000 745,000 $4,279,000 Current liabilities Common stock ($20 par) Retained earnings (Cash dividends, $310,000) $514,000 3,020,000 745,000 $4,279,000 For the year, each company has earned the same income before interest and taxes Sheffield Co. $1,220,000 108,900 1,111,100 499,995 $611,105 Tamarisk Co. $1,220,000 0 1,220,000 549,000 $671,000 Income before interest and taxes Interest expense Income taxes (45%) Net income At year end, the market price of Sheffield's stock was $101 per share, and Tamarisk's was $63.50. Assume balance sheet amounts are representative for the entire year (a) Calculate the return on total assets? (Round answers to 2 decimal places, eg. 16.85%.) Return on total assets Sheffield Company 0% Tamarisk Company Which company is more profitable in terms of return on total assets?

Explanation / Answer

Answer (a) Return on total assets = Net Income/Total Assets S   Co = $611105/4279000 14.28% T Company = $671000/4279000 15.68% T company is more profitable in terms of return on total assets. Answer (b) Return on stockholder’ equity = Net Income/(Common Stock+Retained Earnings) S Co = $611105/(2000000+745000) 22.26% T Company = 671000/(3020000+745000) 17.82% S company is more profitable in terms of return on common stock equity Answer (c) No of Shares = Common stock/Par Value of Share S Co = 2000000/20 100000 T CO. = 3020000/20 151000 Net Income Per Share = Net Income/No of Shares S Co = $611105/100000 6.11 T Company = $671000/151000 4.44 S CO. company has the greater net income per share of stock. Answer (e) Book value per share : (Common Stock+Retained Earnings)/No of Shares S Co = (2000000+745000)/100000 27.45 T Company = (3020000+745000)/151000         24.93

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