Question

b. The following data are taken from the financial statements: Current assets Property, plant, and equipment Current liabilities (non-interest-bearing) Long-term liabilities, 12% Preferred 10% stock Common stock, $25 par Retained earnings, beginning of year Net income for year Preferred dividends declared Common dividends declared Current Year $ 745,000 1,510,000 160,000 400,000 250,000 1,200,000 230,000 110,000 (25,000) (70,000) Preceding Year $ 820,000 1,400,000 140,000 400,000 250,000 1.200,000 160,000 155,000 (25,000) (60,000)

Answer 1

1 computation of returron totat assets Return on total assedy L = Netancomex100 nos Total assets $ Lion 000 OOOO X100 $ 765000+ $15 10,000 34.8901 (91) Computation of returnion stockholders equity Salon Netancome to stockholders equity I = $ 110,000 $250.000 + $1 X100 ,00000 + $ 230,000

Common Stock qii) Computation of return on holders equity Net ancome x 100 common stockholders equity = 100 $116, 000 x $ 12,00.000 + $ 2,30.000 1.6901 = av Earrsing per share on common stock I EPS = net ancome Nomber shares outstanding $ 110,000 U Sooo 0.01 eps $ 2129 na Note : - Number of share = $12,00.000 - 48000

W Tomes anterest earned tar Netancourse before interest and Tan Interest expense Ol= $ 110,000+ $48000 to $ 48000 = 3.29