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Financial Ratios for Common Stockholders [LO2]
Comparative financial statements for Heritage Antiquing Services for the fiscal year ending December 31 appear on the following page. The company did not issue any new common or pre- ferred stock during the year. A total of 600 thousand shares of common stock were outstanding. The interest rate on the bond payable was 14%, the income tax rate was 40%, and the dividend per share of common stock was $0.75. The market value of the company's common stock at the end of the year was $26. All of the company's sales are on account.
Cash
$ 1,080
$ 1,210
Accounts receivable, net
9,000
6,500
Inventory
12,000
10,600
Prepaid expenses
600
500
Total current assets
22,680
18,810
Land
Buildings and equipment, net
36,800
38,000
Total property and equipment .
45,800
47,000
Total assets
$68,480
$65,810
Accounts payable
$18,500
$17,400
Accrued payables
900
700
Notes payable, short term
-
100
Bonds payable
8,000
Total liabilities
27,400
26,200
Preferred stock
1,000
Common stock
2,000
Additional paid-in capital
4,000
Total paid-in capital
7,000
Retained earnings
34,080
32,610
Total stockholders' equity
41,080
39,610
Total liabilities and stockholders' equity
Sales
$66,000
$64,000
Cost of goods sold
43,000
42,000
Gross margin
23,000
22,000
Selling expenses
11,500
11,000
Administrative expenses
7,400
Total selling and administrative expenses
18,900
18,000
Net operating income
4,100
Interest expense
800
Net income before taxes
3,300
3,200
Income taxes
1,320
1,280
Net income
1,980
1,920
Dividends to preferred stockholders
60
400
Net income remaining for common stockholders
1,520
Dividends to common stockholders
450
Net income added to retained earnings
1,470
1,070
Retained earnings, beginning of year
31,540
Retained earnings, end of year
$34,080
$32,610
Required:
Compute the following financial ratios for common stockholders for this year:
1. Gross margin percentage.
2. Earnings per share of common stock.
3. Price-earnings ratio.
4. Dividend payout ratio.
5. Dividend yield ratio.
6. Return on total assets.
7. Return on common stockholders' equity.
8. Book value per share.
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