Problem - Shown below is the liabilities and stockholders' equity section of the balance sheet for Ingalls Company and Wilder Company. Each has assets totaling $4,200,000.
Ingalls Co.
Current liabilities $300,000
Long-term debt, 10% 1,200,000
Common stock ($20 par) 2,000,000
Retained earnings (Cash dividends, $220,000) 700,000
Total $4,200,000
Wilder
Current Liabilities $600,000
Common Stock ($20 par) $2,900,000
Retained Earnings (Cash dividends, $328,000) $700,000
Total $4,200,000
For the year each company has earned the same income before interest and taxes.
Ingalls Co.
Income before interest and taxes $1,200,000
Interest expense 120,000
Total 1,080,000
Income taxes (40%) 432,000
Net Income $648,000
Wilder
Income before interest and taxes $1,200,000
Interest expense -0-
Total 1,200,000
Income taxes (40%) 480,000
Net Income $720,000
At year end, the market price of Ingall's stock was $101 per share, and Wilder's was $63.50. Assume balance sheet amounts are representative for the entire year.
What is Ingall's and Wilder's net income per share of stock?