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. Debt @ 10% Common stock, $10 par Total Common shares Lenow $ S S EBIT $ 100,000 200,000 Total Assets 20,000 $ 300,000 30,000 $ 300,000 120,000 $ 300,000 $ 300,000 20,000 a. Complete the following table given earnings before interest and taxes of $20,000, $30,000, and $120,000. Assume the tax rate is 30 percent. Note: Round your answers to 2 decimal places. Leave no cells blank be certain to enter 0 wherever required. EBIT/TA % % % % Hall Debt @ 10% Common stock, $10 par Total Common shares Lenow EPS $ 200,000 100,000 $ 300,000 10,000 Hall EPS What is the relationship between the EPS of the two firms?
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. Debt @ 10% Common stock, $10 par Total Common shares Lenow $ S S EBIT $ 100,000 200,000 Total Assets 20,000 $ 300,000 30,000 $ 300,000 120,000 $ 300,000 $ 300,000 20,000 a. Complete the following table given earnings before interest and taxes of $20,000, $30,000, and $120,000. Assume the tax rate is 30 percent. Note: Round your answers to 2 decimal places. Leave no cells blank be certain to enter 0 wherever required. EBIT/TA % % % % Hall Debt @ 10% Common stock, $10 par Total Common shares Lenow EPS $ 200,000 100,000 $ 300,000 10,000 Hall EPS What is the relationship between the EPS of the two firms?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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.
Debt @ 10%
Common stock, $10 par
Total
Common shares
Lenow
EBIT
Total Assets
20,000 $ 300,000
30,000 $ 300,000
300,000
$
S
S 120,000 $
$ 100,000
200,000
$ 300,000
20,000
a. Complete the following table given earnings before interest and taxes of $20,000, $30,000, and $120,000. Assume the tax rate is
30 percent.
Note: Round your answers to 2 decimal places. Leave no cells blank be certain to enter 0 wherever required.
EBIT/TA %
%
%
Hall
Debt @ 10%
Common stock, $10 par
Total
Common shares
Lenow EPS
$ 200,000
100,000
Hall EPS
$ 300,000
10,000
What is the relationship between
the EPS of the two firms?
4
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