Dividends on common stock during Year 2 totaled 60 thousand

Dividends on common stock during Year 2 totaled $60 thousand. The market price of common stock at the end of Year 2 was $9.40 per share.

Solution

Answer e.

Dividend per share = Dividends / Number of shares outstanding
Dividend per share = $60 / 100
Dividend per share = $0.60

Dividend Yield Ratio = Dividend per share / Market price per share
Dividend Yield Ratio = $0.60 / $9.40
Dividend Yield Ratio = 6.38%

Answer f.

Average Total Assets = ($1,511 + $1,485) / 2
Average Total Assets = $1,498

Return on Total Assets = [Net Income + Interest Expense * (1 - tax)] / Average Total Assets
Return on Total Assets = [$160 + $35 * (1 - 0.30)] / $1,498
Return on Total Assets = $184.50 / $1,498
Return on Total Assets = 12.32%

Answer g.

Average Stockholders’ Equity = ($851 + $775) / 2
Average Stockholders’ Equity = $813

Return on Common Stockholders’ Equity = Net Income / Average Stockholders’ Equity
Return on Common Stockholders’ Equity = $160 / $813
Return on Common Stockholders’ Equity = 19.68%

Answer h.

Book Value per share = Total Stockholders’ Equity / Number of shares outstanding
Book Value per share = $851 / 100
Book Value per share = $8.51

Answer i.

Working Capital = Current Assets - Current Liabilities
Working Capital = $555 - $430
Working Capital = $125