The financial statements for Thor and Gunnar companies are summarized here:
| Thor Company ($) | Gunnar Company ($) | |
| Balance Sheet | ||
| Cash | 29,000 | 53,200 |
| Accounts Receivable, Net | 71,000 | 22,000 |
| Inventory | 142,000 | 18,000 |
| Equipment, Net | 758,000 | 180,000 |
| Other Assets | 190,000 | 62,400 |
| Total Assets | 1,190,000 | 335,600 |
| Current Liabilities | 156,000 | 17,000 |
| Note Payable (long-term) (12% interest rate) | 254,000 | 54,000 |
| Common Stock (par $20) | 666,000 | 246,000 |
| Additional Paid-in Capital | 64,000 | 7,000 |
| Retained Earnings | 50,000 | 11,600 |
| Total Liabilities and Stockholders’ Equity | 1,190,000 | 335,600 |
| Income Statement | ||
| Sales Revenue | 1,102,000 | 318,000 |
| Cost of Goods Sold | 666,000 | 174,000 |
| Other Expenses | 330,000 | 108,000 |
| Net Income | 106,000 | 36,000 |
| Other Data | ||
| Per share price at end of year | 12.80 | 29.00 |
| Selected Data from Previous Year | ||
| Accounts Receivable, Net | 59,800 | 21,200 |
| Inventory | 127,000 | 39,600 |
| Equipment, Net | 758,000 | 180,000 |
| Note Payable (long-term) (12% interest rate) | 254,000 | 54,000 |
| Total Stockholders’ Equity | 780,000 | 264,600 |
These two companies are in the same business and state but in different cities. Each company has been in operation for about 10 years. Both companies received an unqualified audit opinion on the financial statements. Thor Company wants to borrow $99,000 and Gunnar Company is asking for $30,000. The loans will be for a two-year period. Neither company issued stock in the current year. Assume the end-of-year total assets and net equipment balances approximate the year’s average and all sales are on account.
Calculate the Earnings per Share for each company.
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