Question

This financial information is available for Klinger Corporation.

The weighted-average number of shares of common stock outstanding was 180,500 for 2016 and 152,000 for 2017.

Calculate earnings per share and return on common stockholders’ equity for 2017 and 2016

		2017		2016
Average common stockholders’ equity		$1,750,000		$2,090,000
Dividends paid to common stockholders		90,500		71,500
Dividends paid to preferred stockholders		16,000		16,000
Net income		291,500		250,000
Market price of common stock		19		27

Answer 1

	`	CALCULATION OF EARNING PER SHARES
		Earning per shares = Net Income - Preferred Diovidends / total Shares outstanding
		CALCULATION OF THE RATIO
			Year 2017	Year 2016
		Earning Per shares =
		Net Income =	$              2,91,500	250000
		Less: preferred Dividend Paid	$                 16,000	$                     16,000
		Net Earning Avaialble to Common Shareholders	$              2,75,500	$                 2,34,000
		Divide By	"/" By	"/" By
		Number of Shares Outstanding	1,52,000	1,80,500
		Earning Per shares =	$                      1.81	$                          1.30
		Earning Per Shares =	$                      1.81	$                          1.30
		Return on common stockholders Equity (ROCE)= Net income / Average Common stockholders equity
		CALCULATION OF THE RATIO
			Year 2017	Year 2016
		ROCE =
		Net Income =	$              2,91,500	250000
		Divide By	"/" By	"/" By
		Average Common Stockholders equity	17,50,000	20,90,000
		ROCE =	0.17	0.12
		ROCE (OR in % )=	16.66%	11.96%
	`	CALCULATION OF EARNING PER SHARES
		Earning per shares = Net Income - Preferred Diovidends / total Shares outstanding
		CALCULATION OF THE RATIO
			Year 2017	Year 2016
		Earning Per shares =
		Net Income =	$              2,91,500	250000
		Less: preferred Dividend Paid	$                 16,000	$                     16,000
		Net Earning Avaialble to Common Shareholders	$              2,75,500	$                 2,34,000
		Divide By	"/" By	"/" By
		Number of Shares Outstanding	1,52,000	1,80,500
		Earning Per shares =	$                      1.81	$                          1.30
		Earning Per Shares =	$                      1.81	$                          1.30
		Return on common stockholders Equity (ROCE)= Net income / Average Common stockholders equity
		CALCULATION OF THE RATIO
			Year 2017	Year 2016
		ROCE =
		Net Income =	$              2,91,500	250000
		Divide By	"/" By	"/" By
		Average Common Stockholders equity	17,50,000	20,90,000
		ROCE =	0.17	0.12
		ROCE (OR in % )=	16.66%	11.96%