Use this information for kellman company to answer the questions that follow.
the balance sheets at the end of each of the first two years of operations indicate the following:
kellman company year 2 year 1
total current assets $600,000 $560,000
total investments 60,000 40,000
total property, plant, and equipment 900,000 700,000
total current liabilities 125,000 65,000
total long-term liabilities 350,000 250,000
preferred 9% stock, $100 par 100,000 100,000
common stock, $10 par 600,000 600,000
paid-in capital in excess of par—common stock 75,000 75,000
retained earnings 310,000 210,000
1. using the balance sheets for kellman company, if net income is $150,000 and interest expense is $20,000 for year 2, what is the return on total assets for the year?
a. 10.4% b. 11.9% c. 10.5% d. 8.4%
2. using the balance sheets for kellman company, if net income is $150,000 and interest expense is $20,000 for year 2, what is the return on stockholders' equity for year 2?
a. 6.9% b. 14.5% c. 16.04% d. 13.8%
3. using the balance sheets for kellman company, if net income is $250,000 and interest expense is $30,000 for year 2, what are the earnings per share on common stock for year 2? a. $4.16 b. $4.32 c. $4.02 d. $2.49
4. using the balance sheets for kellman company, if net income is $250,000 and interest expense is $20,000 for year 2, and the market price of common shares is $30, what is the price-earnings ratio on common stock for year 2? (round intermediate calculation to two decimal places and final answers to one decimal place.)
a. 7.5
b. 13.4
c. 12.1
d. 8.5