The following information pertains to Parsons Co.: Preferred stock, cumulative: Par value per share $100 Dividend...
The following information pertains to Parsons Co.:
| Preferred stock, cumulative: | ||
| Par value per share | $100 | |
| Dividend rate | 8% | |
| Shares outstanding | 11,000 | |
| Dividends in arrears | none | |
| Common stock: | ||
| Par value per share | $10 | |
| Shares issued | 125,000 | |
| Dividends paid per share | $2.10 | |
| Market price per share | $47.00 | |
| Additional paid-in capital | $490,000 | |
| Unappropriated retained earnings (after closing) | $250,000 | |
| Retained earnings appropriated for contingencies | $300,000 | |
| Common treasury stock: | ||
| Number of shares | 11,000 | |
| Total cost | $250,000 | |
| Net income | $633,000 |
Compute (assume no changes in balances during the past year):
(Round per share and ratios to 2 decimal places, e.g.
$15.25 or 15.25%.)
| (a) | Total amount of stockholders' equity in the balance sheet | $ | |||
| (b) | Earnings per share of common stock | $ | per share | ||
| (c) | Book value per share of common stock | $ | per share | ||
| (d) | Payout ratio of common stock | % | |||
| (e) | Return on common stock equity | % |
Homework Answers
Ans:
|
a) Total amount of stockholder's equity in the balance sheet |
||
|
Preferred stock (11000*100) |
1100,000 |
|
|
common stock (125000*10) |
1250,000 |
|
|
Additional paid in capital |
490,000 |
|
|
inappropriate Retained Earnings |
250,000 |
|
|
Retained Earnings |
300,000 |
|
|
Treasury stock |
-250000 |
|
|
Total amount of stockholder's equity |
3140,000 |
|
|
b) Earnings per share of common stock |
||
|
Net income -dividend on preferred stock/common stock-common treasury stock |
||
|
preferred stock dividend = (11000*100)*8% = 88000 |
||
|
Earning per share = (633000-88000)/(125000-11000) |
||
|
earning per share = 545000/114000 = 4.78 per share |
||
|
c) Book value per share of common stock |
||
|
stockholder's equity-value of preferred stock/common stock-common treasury stock |
||
|
Book value per share = (3140,000-1100000)/(125000-11000) |
||
|
Book value per share = 17.8947=17.90 |
||
|
d) Payout ratio of common stock = Dividend per share/Earning per share |
||
|
Payout ratio of common stock = 2.10/4.78 |
||
|
Payout ratio of common stock = 43.93% |
||
|
e) Return on common stock equity |
||
|
(633,000-88000)/( (3140,000-1100000)= 545000/2040,000=26.72% |
||
Add Answer to:
The following information pertains to Parsons Co.:
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