Question

Sturmer, Inc. had reported the following balances: (Click the icon to view the 2018 and 2019 balances.) 11. Compute Sturmer's earnings per share for 2019. 12. Compute Sturmer's pricelearnings ratio for 2019, assuming the market price is $48 per share. 13. Compute Sturmer's rate of return on common stockholders' equity for 2019 Data Table 11. Compute Sturmer's earnings per share for 2019. Select the formula, then enter the amounts to calculate the company's earnings = shares. Round earnings per share to the nearest cent.) December 31, 2019 76,000 December 31, 2018 $ 65,000 Net Income Preferred Dividends 15,250 7,500 346,000 Total Stockholders' Equity Stockholders' Equity attributable to Preferred Stock Choose from any list or enter any number in the input fields and then conti 14,000 316,000 14,000 11,000 Number of Common Shares Outstanding 7,000

Answer 1

Ans. 1	Earnings per share = (Net income - Preferred dividends) / Common shares outstanding
	($76,000 - $15,250) / 7,000
	$60,750 / 7,000
	$8.68	per share
Ans. 2	Price earnings ratio = Market price per share / Earnings per share
	$48 / $8.68
	5.53	times
Ans. 3	Return on Common stockholder's equity = (Net income - Preferred dividends) / Average Common stockholder's equity * 100
	($76,000 - $15,250) / $317,000 * 100
	$60,750 / $317,000 * 100
	19.16%
	*Working Notes:
	*Calculations for Common stockholder's equity:
		2019	2018
	Total stockholder's equity	$346,000	$316,000
	Less: Stockholder's equity attributable to Preferred stock	-$14,000	-$14,000
	Common stockholder's equity	$332,000	$302,000
	*Calculations for Average Common stockholder's equity:
	* Average Common Stockholder's equity =   (Beginning Common equity + Ending Common equity) / 2
	($302,000 + $332,000) / 2
	$634,000 / 2
	$317,000