2014 2013 Compute the return on common stockholders’ equity for both years. (Rou
ID: 2491460 • Letter: 2
Question
2014
2013
Compute the return on common stockholders’ equity for both years. (Round answers to 1 decimal place, e.g. 12.5%.)
Korsak Corporation decided to issue common stock and used the $300,000 proceeds to redeem all of its outstanding bonds on January 1, 2014. The following information is available for the company for 2013 and 2014.2014
2013
Net income $ 182,000 $ 150,000 Dividends declared for preferred stockholders 8,000 8,000 Average common stockholders’ equity 1,000,000 700,000 Total assets 1,200,000 1,200,000 Current liabilities 100,000 100,000 Total liabilities 200,000 500,000Explanation / Answer
2014 2013 Net income $182,000 $150,000 Less: Dividend declared - Preffered Stockholders $8,000 $8,000 Net income Available for Common Stockholders (A) $174,000 $142,000 Avg. Common Stockholder's Equity (B) $1,000,000 $700,000 Return on Common's Stockholder equity (A/B X 100) 17.40% 20.29%
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