Shown below is the liabilities and stockholders’ equity section of the balance sheet for Splish Company and Blossom Company. Each has assets totaling $4,327,000. Splish Co. BlossomCo. Current liabilities $285,000 Current liabilities $855,000 Long-term debt, 9% 1,220,000 Common stock ($20 par) 2,740,000 Common stock ($20 par) 2,090,000 Retained earnings (Cash dividends, $333,000) 732,000 Retained earnings (Cash dividends, $229,000) 732,000 $4,327,000 $4,327,000 For the year, each company has earned the same income before interest and taxes. Splish Co. Blossom Co. Income before interest and taxes $1,250,000 $1,250,000 Interest expense 109,800 0 1,140,200 1,250,000 Income taxes (45%) 513,090 562,500 Net income $627,110 $687,500 At year end, the market price of Splish’s stock was $101 per share, and Blossom’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, e.g. 16.85%.) Return on total assets Splish Company % Blossom 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. 16.85%.) Return on common stock equity Splish Company % Blossom Company % Which company is more profitable in terms of return on common stockholders’ equity? 

(c) Calculate the Net income per share. (Round answers to 2 decimal places, e.g. $6.85.) Net income per share Splish Company $ Blossom 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 stockholders of Splish 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.) Book value per share Splish Company $ Blossom Company $

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