The Stockholders' Equity section of the balance sheet for Cooperstown Corp. at the end of 2012 appears as follows:
8%, $100 par, cumulative preferred stock, 200,000 shares
authorized, 50,000 shares issued and outstanding..............................$ 5,000,000
Additional paid-in capital on preferred......................................................2,500,000
Common stock, $5 par, 500,000 shares authorized,..........................................400,000
shares issued and outstanding................................................................2,000,000
Additional paid-in capital on common.....................................................18,000,000
Retained earnings.............................................................................37,500,000
Total stockholders' equity..................................................................$65,000,000
Net income for the year was $1,300,000. Dividends were declared and paid on the preferred shares during the year, and a quarterly dividend of $0.40 per share was declared and paid each quarter on the common shares. The closing market price for the common shares on December 31, 2012, was $24.75 per share.
Required
1. Compute the following ratios for the common stock:
a. Earnings per share
b. Price/earnings ratio
c. Dividend payout ratio
d. Dividend yield ratio
2. Assume that you are an investment adviser. What other information would you want to have before advising a client regarding the purchase of Cooperstown stock?