In 2002, the corporation generated a net income of $430,000. a. Calculate the earnings per share in 2002. ween b. Assume that in 2003 Sullivan Corporation issued 300,000 more shares of $1 par value common stock for a market price of $10 per share. Fifty per- cent of the proceeds will be used to pay down the long-term debt, 25 per- cent of the proceeds will be used to buy fixed assets, and the remainder will be deposited in the corporate bank account. Compile the balance sheet after the new stock issue. c. Assume that Sullivan Corporation generates a net income of $450,000 in 2003 (after the new stock issue). Calculate the new earnings per share. How might the stockholders feel about the results of the new stock issue? 9. The following information pertains to the performance of the Williams Hotel for the year 2003, along with some pertinent industry averages. Total revenue Net income Total assets, net Industry average profit margin Industry average for return on investment (Assets) $4,500,000 $ 256,000 $3,000,000 10% 6.5% a. Calculate the profit margin and return-on-investment ratios for the Williams Hotel. Is the hotel being managed effectively? b. What could explain the conflicting information from the two ratios? Problems | 63 4