Lundberg Corporation\'s most recent balance sheet and income statement appear be
ID: 2500936 • Letter: L
Question
Lundberg Corporation's most recent balance sheet and income statement appear below:
Dividends on common stock during Year 2 totaled $30 thousand. The market price of common stock at the end of Year 2 was $9.37 per share.
Compute the dividend yield ratio for Year 2. (Round your answer to 2 decimal places. Omit the "%" sign in your response.)
Compute the return on total assets for Year 2. (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "%" sign in your response.)
Compute the return on common stockholders' equity for Year 2. (Round your answer to 2 decimal places. Omit the "%" sign in your response.)
Compute the book value per share for Year 2. (Round your answer to 2 decimal places. Omit the "$" sign in your response.)
Lundberg Corporation's most recent balance sheet and income statement appear below:
Explanation / Answer
1- The dividend yield or dividend-price ratio of a share is the dividend per share, divided by the price per share
dividend per share = total dividend/ no of share outstand
30000/100000 = .3 per share
dividend yield = (.3/9.37)*100 = 3.20
2- Compute the return on total assets for Year 2
A ratio that measures a company's earnings before interest and taxes (EBIT) against its total net assets. The ratio is considered an indicator of how effectively a company is using its assets to generate earnings before contractual obligations must be paid.
return on total assets = EBIT/ total assets = 203/1369 = .1482
3- Compute the return on common stockholders' equity for Year 2
return on common stockholders' equity = net income - preffered dividend / equity share outstanding
net income = 120000 - preference dividend = 120000 - 21000 = 99000
99000/100000 = .99
4- Compute the book value per share for Year 2.
book value per share = Stockholders' Equity - Preferred Stock
Average shares outstanding
(834 - 210)/ 100 = 6.24
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