Compute dividend payout ratio for common stockholders

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Reference no: EM131051560

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

Property and equipment:    

Land

9,000

9,000

Buildings and equipment, net

36,800

38,000

Total property and equipment .

45,800

47,000

Total assets 

$68,480

$65,810

Liabilities and Stockholders' Equity    
Current liabilities:    

Accounts payable

$18,500

$17,400

Accrued payables

900

700

Notes payable, short term

-

100

Total current liabilities . Long-term liabilities: 19,400 18,200

Bonds payable

8,000

8,000

Total liabilities

27,400

26,200

Stockholders' equity:    

Preferred stock

1,000

1,000

Common stock

2,000

2,000

Additional paid-in capital

4,000

4,000

Total paid-in capital

7,000

7,000

Retained earnings

34,080

32,610

Total stockholders' equity

41,080

39,610

Total liabilities and stockholders' equity

$68,480

$65,810

 

Sales

$66,000

$64,000

Cost of goods sold

43,000

42,000

Gross margin

23,000

22,000

Selling and administrative expenses:    

Selling expenses

11,500

11,000

Administrative expenses

7,400

7,000

Total selling and administrative expenses

18,900

18,000

Net operating income

4,100

4,000

Interest expense

800

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

1,920

1,520

Dividends to common stockholders

450

450

Net income added to retained earnings

1,470

1,070

Retained earnings, beginning of year

32,610

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.

Reference no: EM131051560

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