Perkins Services reported the following balances:
Compute earnings per share for 2018, price/earnings ratio for 2018, assuming the market price on December 31, 2018 is $37.50 per share, and the rate of return on common stockholders' equity for 2018.
(Show your computations and round to two decimal places.)
Average number of common shares outstanding: (16,000 + 12,000) / 2 = 14,000
Earnings Per Share = (Net income - Preferred dividends)/Average number of common shares outstanding
Earnings Per Share = ($45,000 - $5,000) / 14,000
Earnings Per Share = $2.86
Price/earnings ratio = Market price per share of common stock / Earnings per share
Price/earnings ratio = $37.50 / $2.86 = 13.11
Rate of return on common stockholders' equity:
Common stockholders' equity:
2018: Total stockholders' equity $375,000 less total stockholders' equity attributable to preferred stock $40,000 = $335,000
2017: Total stockholders' equity $368,000 less total stockholders' equity attributable to preferred stock $24,000 = $344,000
(Net income - Preferred dividends) / Average common stockholders' equity
($45,000 - $5,000) / ($335,000 + $344,000) / 2
$40,000 / $339,500 = 11.78%
You might also like to view...
Steve and Roger allocate 2/3 of their partnership's profits and losses to Steve and 1/3 to Roger. If the net income of the firm is $30,000, calculate Roger's share of net income. (Do not round any intermediate calculations.)
A) $20,000 B) $10,000 C) $30,000 D) $25,000
Answer the following statements true (T) or false (F)
1. A micro climate is defined as the general atmosphere of a workplace. 2. To enhance the listening climate, a listener should set aside whatever he/she is doing. 3. Strategic managerial listening requires listening to the spoken words and attention to the nonverbal elements and the total environment. 4. Managers should discourage their subordinates from listening to the grapevine because the information is usually false.
The high/low method:
A) considers only the highest and lowest costs for a given time period. B) is superior to regression analysis. C) considers all data points available. D) uses the data points for only the high and low levels of activity.
If an adjusting entry includes a debit to Rent Expense, it indicates that the payment of rent had been previously recorded as a(n) ________
A) deferred expense B) depreciation expense C) accrued expense D) accrued revenue