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Lenow Drug Stores and Hall Pharmaceuticals are competitors in the dis

Lenow Drug Stores and Hall Pharmaceuticals are competitors in the dis 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. Hall Lenow Debte 18% Common stock, $10 par Total Common shares $170,889 Debt @ 18% 340,899 Common stock, $10 par $510,880 Total 34,889 Conmon shares $348,689 178,089 $510,880 17,899 a. Complete the following table given earnings before interest and taxes of $21,000, $51,000 and $62,000. Assume the tax rate is percent. (Negative amounts should be indicated by parentheses or a minus sign. Round your answers to 2 decimal places.) What is the relationship between the EPS of the two firms? EHITTA Lenow EPS Hall EPS ERIT 21,000 51,000 62,000 Total Assets $ 510,000 $ 510,000 $ 510,000 b-1. What is the EBIT/TA rate when the firms have equal EPS? EBIT/TArte b-1. What is the EBIT/TA rate when the firms have equal EPS? ESTITA de 1 5 b-2. What is the cost of debt? Cost of debt b-3. State the relationship between earnings per share and the level of EBIT. EPS is unaffected by financial leverage when the pre-tax return on assets (EBIT/TA) the cost of debt c. If the cost of debt went up to 12 percent and all other factors remained equal, what would be the break-even level for EBIT Break-even level

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