1a.

1. The balance sheets at the end of each of the first two years of operations indicate the following:

   Kellman Company
   	Year 2	Year 1
   Total current assets	$625,690	$576,736
   Total investments	68,331	47,918
   Total property, plant, and equipment	913,124	790,696
   Total current liabilities	114,620	86,615
   Total long-term liabilities	312,547	231,648
   Preferred 9% stock, $100 par	86,080	86,080
   Common stock, $10 par	566,522	566,522
   Paid-in capital in excess of par-common stock	64,436	64,436
   Retained earnings	462,940	380,049

   Using the balance sheets for Kellman Company, if net income is $100,692 and interest expense is $30,222 for Year 2, and market price is $35, what is the price-earnings ratio on common stock for Year 2 (rounded to two decimal places)?

   Select the correct answer.

   1.64

   21.34

   8.66

   8.84

1b.

1. The balance sheets at the end of each of the first two years of operations indicate the following:

   Kellman Company
   	Year 2	Year 1
   Total current assets	$609,898	$576,893
   Total investments	62,774	47,893
   Total property, plant, and equipment	908,976	624,191
   Total current liabilities	102,146	80,419
   Total long-term liabilities	311,787	234,051
   Preferred 9% stock, $100 par	89,849	89,849
   Common stock, $10 par	558,859	558,859
   Paid-in capital in excess of par-common stock	69,475	69,475
   Retained earnings	449,532	216,324

   Using the balance sheets for Kellman Company, if net income is $114,009 and interest expense is $38,170 for Year 2, what is the return on total assets for the year (round percent to two decimal points)?

   Select the correct answer.

   7.21%

   10.75%

   9.13%

   10.85%