The current year financial statements for Blue Water Company and Prime Fish Company are presented below. Balance sheet Cash Accounts receivable (net) Inventory Property & equipment (net) Other assets Total assets Current liabilities Long-term debt (interest rate: 10%) Capital stock ($10 par value) Additional paid-in capital Retained earnings Total liabilities and stockholders' equity Income statement Sales revenue (1/3 on credit) Cost of goods sold Operating expenses Net income Other data Per share stock price at end of current year Average income tax rate Dividends declared and paid in current year Blue Water $ 42,000 43,000 94,000 155,000 85,000 $ 419,000 $ 94,000 72,000 155,000 30,000 68,000 $ 419,000 $ 432,000 (236,000) (163,000) $ 33,000 $23.0 30% $ 34,000 Prime Fish $ 20,000 34,000 46,000 413,000 315,000 $ 828,000 $ 64,000 62,000 522,000 107,000 73,000 $ 828,000 $ 792,000 (401,000) (312,000) $ 79,000 $ 25 30% $ 153,000 Both companies are in the fish catching and manufacturing business. Both have been in business approximately 10 years, and each has had steady growth. The management of each has a different viewpoint in many respects. Blue Water is more conservative, and as its president has said, "We avoid what we consider to be undue risk." Neither company is publicly held.

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