Consider the following information. Stock price $55/share Avg. common shares outstanding 850,000 Common dividends $765,000 Dividends...
Consider the following information.
| Stock price | $55/share | Avg. common shares outstanding | 850,000 | ||||
| Common dividends | $765,000 | Dividends per common share | $0.90/share | ||||
| Preferred dividends | $238,800 | Net income | $15,485,000 | ||||
| 2019 preferred stock | $6,162,000 | 2018 preferred stock | $5,299,000 | ||||
| 2019 total stockholders’ equity | $28,435,000 | 2018 total stockholders’ equity | $25,483,000 | ||||
| Purchases of treasury stock | $120,000 | ||||||
Required:
1. Calculate the stockholder payout ratios. (Note: Round answers to three decimal places.)
| Dividend Yield | % |
| Dividend Payout | % |
| Total Payout | % |
| Stock Repurchase Payout | % |
2. Calculate the stockholder profitability ratios. (Note: Round answers as follows: Return on Common Equity to three decimal places; Earnings per Share to two decimal places.)
| 2019 Return on Common Equity | % | |
| Earnings per Share | $ | per share |
Homework Answers
1)
| Formula | ||
| Dividend yield | Dividend per share /market price per share |
.90/55 1.636% |
| Dividend payout ratio | Total common stock Dividend /Earning available to common stockholders |
765000/15246200 5.018% |
| Total payout ratio | Total dividend paid to both stockholders /Net income |
(765000+238800)/15485000 1003800/15485000 6.482% |
| Stock repurchase payout | Purchase of treasury stock/market capitalization of common stock |
120000/(850000*55) 120000/46750000 .257% |
**
Earning available to common stockholders = Net income -preferred dividend
= 15485000 - 238800
= 15246200
b)Common stockholders equity :
Beginning = Total -preferred
= 25483000-5299000
= 20184000
Ending= 28435000-6162000
=22273000
Average common stockholders equity= [20184000 +22273000]/2
= 42457000/2
= 21228500
| Formula | ||
| Return on common equity | Earning available to common stockholders /Average common stockholders equity |
15246200/21228500 71.819% |
| Earning per share | Earning available to common stockholders/average common shares outstanding |
15246200/850000 =$ 17.94 per share |
Add Answer to:
Consider the following information.
Stock price
$55/share
Avg. common shares
outstanding
850,000
Common dividends
$765,000
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