(Profitability analysis) Refer to Simon Comanys financial information below. Add
ID: 2424154 • Letter: #
Question
(Profitability analysis)
Refer to Simon Comanys financial information below. Additional information about the company follows. To help evaluate the company's profitability, compute and interpret the following ratios for 2015 and 2014: (1) return on common stockholders equity - percent rounded to one decimal, (2) price-earnings ratio on December 31 - rounded to one decimal and (3) dividend yield - percent rounded to one decimal.
Simmon Company information:
For Year ended December 31
Simon Companys information:
At December 31
2013
Long-term notes payable secured by
mortgage on plant assets
$377,500
Common stock market price, December 31, 2015.............$30.00 Common stock market price, December 31, 2014.............$28.00 Annual cash dividends per share in 2015........................... 0.29 Annual cash dividends per share in 2014...........Explanation / Answer
Particulars
2015
2014
Net Income (A)
31100
29375
No of shares common stock (B)
16350
16350
EPS (A)/(B)
1.90
1.80
Transfer to Retained earning
26,350
25,500
Divident paid
4750
3875
DPS
0.29
0.24
Common stock market price
30
28
Divident yield
0.97%
0.85%
Particulars
2015
2014
2013
Common stock
163500
163500
163500
Retaned earning
131100
104750
79250
Total
294600
268250
242750
Average common stock holder's equity
281425
255500
Net Income
31100
29375
Return on common stock holder's Equity
11.05%
11.50%
Return on equity has fallen in 2015 from 2014 by 0.45% where as net income has increased , EPS has increased, the reasons is company reinvested the retained earning of 2014 in 2015 but it could not earn the same % of return on retained earning proportion what it was earning in 2014 on total share holder's equity. Overall company is performing good paying good divident. Market price hass also increased.
Particulars
2015
2014
Net Income (A)
31100
29375
No of shares common stock (B)
16350
16350
EPS (A)/(B)
F5/F6
G5/G6
Transfer to Retained earning
131100-104750
104750-79250
Divident paid
F5-F8
G5-G8
DPS
F9/F6
G9/G6
Common stock market price
30
28
Divident yield
F10/F11
G10/G11
Particulars
2015
2014
2013
Common stock
163500
163500
163500
Retaned earning
131100
104750
79250
Total
F17+F16
G17+G16
H17+H16
Average common stock holder's equity
(F18+G18)/2
(G18+H18)/2
Net Income
31100
29375
Return on common stock holder's Equity
F20/F19
G20/G19
Particulars
2015
2014
Net Income (A)
31100
29375
No of shares common stock (B)
16350
16350
EPS (A)/(B)
1.90
1.80
Transfer to Retained earning
26,350
25,500
Divident paid
4750
3875
DPS
0.29
0.24
Common stock market price
30
28
Divident yield
0.97%
0.85%
Particulars
2015
2014
2013
Common stock
163500
163500
163500
Retaned earning
131100
104750
79250
Total
294600
268250
242750
Average common stock holder's equity
281425
255500
Net Income
31100
29375
Return on common stock holder's Equity
11.05%
11.50%
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