Question

Market price is $56
20Y2 2011 Retained earnings, January 1 $ 1,074,900 $ 1,267,700 292,000 Net income 220,200 Total $ 1,559,700 $ 1,295,100 Dividends On preferred stock $ 9,800 $ 9,800 17,600 On common stock 17,600 Total dividends $ 27,400 $ 27,400 Retained earnings, December 31 $ 1,532,300 $ 1,267,700

Answer 1

11	Asset turnover:-
a.	Net Sales				$ 1,768,425.00
b.	Average Total assets
	opening + closing		3439539+ 4051370	=	$ 3,745,454.50
	2		2
	Ratio (a/b)				0.5	times
12	Return on Total Assets Ratio:-
a.	Net income				$         292,000
b.	Interest Expense (1-tax rate) (Tax rate = (39800/331800)*100 = 12%)		120000 (1-0.12)		$         105,600
c	Net income + Interest Expense (1-tax rate)				$         397,600
d	Average Total assets
	opening + closing		3439539+ 4051370	=	$ 3,745,454.50
	2		2
	Ratio (c/d *100)				10.6%
13. Return on stockholders' equity:-
a.	Net income				$         292,000
b.	Average stockholders' equity
	opening + closing		1867700 + 2132300	=	$      2,000,000
	2		2
	Ratio (a/b *100)				14.6%
14. Return on common stockholders' equity:-
a.	Earnings available for Equity shareholders = Net Income - Preferred Dividends	=	292000-9800	=	$         282,200
b.	Average common stockholder equity
	Common Stockholders' equity= Total Stockholders' equity -Preferred stock
	Opening Common Stockholders' equity = 1867700-280000	=	1,587,700
	Closing Common Stockholders' equity = 2132300-280000	=	1,852,300
	opening + closing		1587700+ 1852300	=	$      1,720,000
	2		2
	Ratio (a/b *100)				16.4%
15. Earnings per share on common stock:-
a.	Earnings available for Equity shareholders = Net Income - Preferred Dividends	=	292000-9800	=	$         282,200
b.	Average Number of shares of common stock
	opening + closing		32,000 + 32,000	=	32,000
	2		2
	Ratio (a/b)				$             8.8
16. Price earnings Ratio on Common Stock :-
a.	Market price per share				$             56.00
b.	Earnings per share				$                 8.8
	Ratio (a/b)				6.35	times
17. Dividends per share of Common Stock :-
a.	Common Stock Dividend declared				$           17,600
b.	Number of shares of common stock				32,000
	Ratio (a/b)				$           0.55
18	Dividend Yield on Common Stock Ratio:-
a.	Dividend Per Share				$               0.55
b.	Market Price per share				$             56.00
	Dividend Yield Ratio (a/b*100)				1.0%

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