Shown below is the liabilities and stockholders\' equity section of the balance

Question

Shown below is the liabilities and stockholders' equity section of the balance sheet for Jana Kingston Company and Mary Ann Benson Company. Each has assets totaling $4,428,100. Jana Kingston Co. Mary Ann Benson Co Current liabilities Long-term debt, 11% Common stock ($20 par) Retained earnings (Cash dividends, $323,500 1,235,000 2,157,000 Current liabilities Common stock ($20 par) Retained earnings (Cash dividends, $328,700) $741,500 2,974,000 712,600 712,600 $228,800) $4,428,100 $4,428,100 For the year, each company has earned the same income before interest and taxes. Jana Kingston Co. Mary Ann Benson Co Income before interest and taxes Interest expense $1,203,000 135,850 1,067,150 480,218 $586,932 $1,203,000 0 1,203,000 541,350 $661,650 Income taxes (45%) Net income 63.50. Assume balance sheet amounts are representative for the At year end, the market price of Kingston's stock was $101 per share, and Benson's was entire year (a) Calculate the return on total assets? (Round answers to 2 decimal places, eg. 16.85%.) Return on t Kingston Company Benson Company Which company is more profitable in terms of return on total assets? (b) Calculate the return on common stock equity? (Round answers to 2 decimal places, e.g. 16.35%.) Return on common sto Kingston Company Benson Company Which company is more profitable in terms of return on common stock equity? (c) Calculate the Net income per share. (Round answers to 2 decimal places, e.g. $6.85.) et income per shar Kingston Company Benson Company 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 stockholdersana Kingston Co. to have the long-term debt outstanding? (e) What is the book value per share for each company? (Round answers to 2 decimal places, e.g. $6.85) value Kingston Companys Benson Company

Explanation / Answer

Kingston co benson Company Ans a Return on total Assets 13.25 14.94 % Net Income/Total Assets*100 586932/4428100*100 661650/4428100*100 Benson company is better ans b Return on Common stock equity 20.45 17.95 % Net Income/common stock equity*100 586932/(2157000+712600)*100 661650/(2974000+712600)*100 Kingston is better ans c Net Income per share 5.44 4.45 Net Income/No. of common stock 586932/107850 661650/148700 No . Of common stock 107850.00 148700.00 2157000/20 2974000/20 Kingston co is better and d1 Yes ans e Book value per share 26.61 24.79 Equity/No. of common stock (2157000+712600)/107850 (2974000+712600)/148700 Kingston is better

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