The comparative financial statements of Stargel Inc. are as follows. The market

Question

The comparative financial statements of Stargel Inc. are as follows. The market price of Stargel common stock was $119.70 on December 31, 20Y2.

Required:

Determine the following measures for 20Y2, rounding to one decimal place, except dollar amounts which should be rounded to the nearest cent. Use the rounded answer of the requirement for subsequent requirement, if required. Assume 365 days a year.

Stargel Inc. Comparative Retained Earnings Statement For the Years Ended December 31, 20Y2 and 20Y1     20Y2     20Y1 Retained earnings, January 1 $5,375,000 $4,545,000 Net income 900,000 925,000 Total $6,275,000 $5,470,000 Dividends: Preferred stock dividends $45,000 $45,000 Common stock dividends 50,000 50,000 Total dividends $95,000 $95,000 Retained earnings, December 31 $6,180,000 $5,375,000

Explanation / Answer

Answer

Return on total assets = Net Income/Average Total Asset

Return on total assets = 900000/9267500

Return on total assets = 9.7%

   Return on stockholders’ equity = Net Income/Average Stock holders Equity

   Return on stockholders’ equity = 900000/6777500

   Return on stockholders’ equity = 13.3%

Return on common stockholders’ equity = (Net Income-Preferred Stock Dividend)/ Average Common stockholders’ equity

Return on common stockholders’ equity = (900000-45000)/6277500

Return on common stockholders’ equity = 13.6%

Working

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.