a Return on Assets Calculate the companys return on assets f

a) Return on Assets Calculate the company’s return on assets for 2016 and compare the result to the industry average.

b) Dividends per share Calculate the company’s dividend paid per share of common stock. What was the dividends payout ratio?

c) Dividends per share Calculate the company’s dividend paid per share of common stock. What was the dividends payout ratio?

2016 (Thousands of Dollars, except Earnings per Share Sales revenue.. Cost of goods sold. Net income Dividends Earnings per share.. . $210,000 125,000 8,300 2,600 4.15 HI-TECH INSTRUMENTS, INC Balance Sheets Thousands of Dollars) Dec. 31, 2016 Dec. 31, 2015 Assets $18,300 46,000 39,500 103,800 52,600 15,600 $172,000 Cash Accounts receivable (net) Inventory.. .. 18,000 41,000 43,700 Total Current Assets Plant assets (net) Other assets. Total Assets 102,700 50,500 13,800 $167,000 Liabilities and Stockholders\' Equity Notes payable-banks Accounts payable. Accrued liabilities. $6,000 22,500 16,500 45,000 40,000 85,000 50,000 37,000 87,000 $172,000 $6,000 18,700 21,000 45,700 40,000 85,700 50,000 31,300 81,300 $167,000 Total Current Liabilities. 996 Bonds payable. Total Liabilities Common stock, $25 par value (2,000,000 shares Retained earnings. Total Stockholders\' Equity. Total Liabilities and Stockholders\' Equity . .. . ..

Solution

Answer:-

Return on Assets :-

The return on assets ratio, often called the return on total assets,

Return on assets = Net income / Average Total Assets

Net Income Given = $ 8300 ( In thousands)

Average Total assets for the year 2016

= (Total assets of 2016 + Total assets of 2015) / 2

Total Assets of 2016 = $ 172000

Total Assets of 2015 = $ 167000

Average assets = (172000+167000) /2 = $ 169500

Return on Assets = 8300 / 169500 = 4.90%

Comparision to Industry Average : -

Company Average 7.6 % Return on net assets this means the competitors are utilizing their assets resources more efficently then HI-TECH Instrument Inc. as the company is able to generate only 4.9 % on return on assets .

Solution :-

Should utilize their assets base more effectively and try to push human resources for efficent utilisation of such resources to generate more income.

2. Dividend per share = Dividend distributed / No of shares

Dividend = $2,600 ( In thousands)

No of Shares :-

AS given in Balance sheet = 2,000 ( In thousands 2000000/1000 = 2000)

Dividend per share = 2600 / 2000 = $ 1.30 Per Share ( Answer)

B. Dividend payout ratio = Dividend distributed / net Income

Dividend Distributed = 2600

Net Income = 8300

DPR = 2600/ 8300 = 31.33% ( Answer)

Retention Ratio = 100 - 31.33% = 68.67%