Question

The following data are taken from the financial statements, determine for the current year the (a) return on total assets, (b) return on stockholders' equity, (c) return on common stockholders' equity, (d) earnings per share on common stock, (e) price-earnings ratio on common stock, and (f) dividend yield. The current market price per share of common stock is $25. Current Year Current assets $745,000 Preceding Year $820,000 1,400,000 1,510,000 Property, plant, and equipment Current liabilities 160,000 140,000 400,000 400,000 250,000 250,000 1,200,000 1,200,000 (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 230,000 160,000 110,000 155,000 (25,000) (25,000) (70,000) (60,000) Round dollar values to two decimal places and other final answers to one decimal place. a. Return on total assets % b. Return on stockholders' equity % c. Return on common stockholders' equity % d. Earnings per share on common stock $ e. Price-earnings ratio on common stock f. Dividend yield %

Answer 1

	Percentage
Return on assets (Net income/total assets) 110000/(745000+1510000)	4.89%
Return on stock holders equity (Net income/common stock+prefered stock) 110000/(1200000+250000)	7.59%
Return on common stock holders equity(Net income -(prefered dividend+ )/common stock stock 110000-25000)/1200000	7.08%
Earnings per share on common stock =(Net income - prefered dividend)/no of common stock =110000-25000/(1200000/25)	1.77
price earning ration on common stock= current share price/earnings per share =25/1.77	14.12
Dividend yeild =dividend per share/share price dividend per share = dividend/no of common stock =25000/(1200000/25) =.52/25	2.08%