What follows are the liabilities and shareholders' equity sections of the statements of financial position for Kao Corp. and Bennington Corp. Each has assets totalling $4.2 million.

For the year, each company has earned the same income before interest and tax.
Kao Corp. Bennington Corp.
Income before interest and taxes ....................... $1,200,000 ................. $1,200,000
Interest expense .............................................. 120,000 ......................... -0-
1,080,000 ................... 1,200,000
Income taxes (30%) ......................................... 324,000 ...................... 360,000
Net income ................................................ $ 756,000 .................... $ 840,000
At year end, the market price of Kao's shares was $101 per share; it was $63.50 for Bennington's.
Instructions
(a) Which company is more profitable in terms of return on total assets?
(b) Which company is more profitable in terms of return on shareholders' equity?
(c) Which company has the greater net income per share? Neither company issued or reacquired shares during the year.
(d) From the point of view of income, is it advantageous to Kao's shareholders to have the long-term debt outstanding? Why or why not?
(e) What is each company's price earnings ratio?
(f) What is the book value per share for each company?

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Kao Corp Bennington Corp Current liabilities Long-term debt, 10% Common shares 300,000 Current liabilities ,200,000 Common shares $600,000 2,900,000 (145,000 shares issued) (100,000 shares issued) 2,000,000 Retained earnings Retained earnings (Cash dividends, $328,000) 700,000 (Cash dividends, $220,000) 700,000 $4,200,000 $4,200,000