Exercise 15-19 Shown below is the liabilities and stockholders' equity section of the balance sheet for Pronghorn Company and Stellar Company. Each has assets totaling $4,133,000. Pronghorn Co. StellarCo. Current liabilities Current liabilities $757,000 $317,000 Common stock ($20 par) Long-term debt, 9% 1,090,000 2,710,000 Common stock ($20 par) 2,060,000 Retained earnings (Cash dividends, $353,0000) 666,000 Retained earnings (Cash dividends, $225,000) 666,000 $4,133,000 $4,133,000 For the year, each company has earned the same income before interest and taxes Stellar Co. Pronghorn Co. Income before interest and taxes $1,090,000 $1,090,000 Interest expense 98,100 0 991,900 1,090,000 Income taxes (45%) 490,500 446,355 Net income $545,545 $599,500 At year end, the market price of Pronghorn's stock was $101 per share, and Stellar'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 Pronghorn Company Return on total assets Pronghorn Company Stellar 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 Pronghorn Company Stellar 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 Pronghorn Company Net income per share Pronghorn Company Stellar 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 Pronghorn 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 Pronghorn Company Stellar Company Open Show Work Click if you would like to Show Work for this
