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Lenow Drug Stores and Hall Pharmaceuticals are competitors in the discount drug chain store business. The separate capital structures for Lenow and Hall are

Lenow Drug Stores and Hall Pharmaceuticals are competitors in the discount drug chain store business. The separate capital structures for Lenow and Hall are presented here. Lenow Hall Debt @ 9% Common stock, $10 par Total Common shares $ 130,000 260,000 $ 390,000 26,000 Debt 9% Common stock, $10 par Total Common shares $ 260,000 130,000 $ 390,000 13,000 a. Complete the following table given earnings before interest and taxes of $17,000, $35,100, and $58,000. Assume the tax rate is 20 percent. Note: Negative amounts should be indicated by parentheses or a minus sign. Round your answers to 2 decimal places. Leave no cells blank be certain to enter O wherever required. EBIT Total Assets EBIT/TA % Lenow EPS Hall EPS What is the relationship between the EPS of the two firms? E 17,000 $ 390,000 % $ 35,100 $ 390,000 % $ 58,000 $ 390,000 %

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EBIT TA can be computed as EBIT TA 100 17000 390000 100 436 35100 390000 100 9 ... blur-text-image

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