TABLE P2.1 Balance Sheet Statement as of December 31, 2015 Assets Cash $150,000 Marketable securities 200,000 Accounts receivable 150,000 Inventories 50,000 Prepaid taxes and insurance 30,000 Manufacturing plant at cost $600.000 Less accumulated depreciation 100,000 Net fixed assets 500.000 Goodwill 20,000 Problems 47 Liabilities and Shareholders' Equity Notes payable 50,000 Accounts payable 100.000 Income taxes payable 300,000 Long-term mortgage bonds 400,000 Preferred stock, 6%, $100 par value (1,000 shares) 100.000 Common stock, $15 par value (10,000 shares) 150,000 Capital surplus 150,000 Retained earnings 70,000 ing the first year. Financial Ratio Analysis (b) If the firm had a net income of $500,000 after (d) Compute the net cash flow from the project dur- taxes, what are the carnings per share? (c) When the firm issued its common stock, what was the market price of the stock per share? 2.2 A chemical processing firm is planning on add- ing a duplicate polyethylene plant at another location The financial information for the first project year is shown in Table P2.2. (a) Compute the working-capital requirement dur- ing the project period.. (b) What is the taxable income during the project period? (c) What is the net income during the project period? 2.3 The data in Table P2.3 are available for two companies, A and B, all stated in millions (a) Calculate each company's return on equity (ROE) and return on total assets (ROA). (b) Why Company B's ROE so much higher than Company A's? Does this mean Company B is a better company? Why or why not? (c) If Companies A and B were combined (merged). what would be the impact on the results on ROE? Under what conditions would such a combina- tion make sense?