Calculate the Payout ratio for Tarzwell Inc

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Question - Tarzwell Inc. had net income for 2020 of $5,325,700. The company had 2,340,000 of common shares outstanding throughout the year. During 2020, Tarzwell paid dividends on the common shares of $0.10 per share. Average common shareholders' equity was $23,400,000, and the market value of the shares on December 31, 2020 was $14 per share.

Tarzwell Inc. also had 100,000 shares outstanding of cumulative, $4 preferred shares. The shares were outstanding for the full year, and dividends had been kept current for all past years.

Required - Calculate the following ratios for Tarzwell Inc.:

(a) Rate of return on equity.

(b) Payout ratio.

(c) Price-earnings ratio.

Reference no: EM132521790

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