From the following data, determine for the current year the rate earned on total

Question

From the following data, determine for the current year the rate earned on total assets, rate earned on stockholders' equity, rate earned on common stockholders" equity, earnings per share on common stock, price-earnings ratio on common stock, and dividend yield on common stock. Assume that the current market price per share of common stock is $25. Rate earned on total assets Rate earned on stockholders" equity Rate earned on common stockholder' equity Earnings per share on common stock Price-earnings ratio on common stock

Explanation / Answer

a). Return on Assets=Net income*100/Average assets=$110,000*100/$2,237,500=4.92%

b).Return on stock holders equity=Net income*100/Average stock holders equity(including earnings)=$110,000*100/$1,687,500=6.52%

c).Return on Common stock=(Net income-preference dividend)*100/Average common stock holders equity(including earnings)=$85,000*100/$1,437,500

=5.91%

d)earning per share=Net income after preference dividend/noo of common stock share=$85,000/48,000=1.77

e) price earning ratio=Market price/EPS=$25/1.77=14.12

f) dividend yield=$70,000*100/$1,200,000=5.833%

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