Albion Inc. provided the following information for its most recent year of operation. The tax rate is 40 percent.

Sales ..................... $100,000

Cost of goods sold ................. $45,000

Net income .................... $10,500

Interest expense ..................... $350

Assets—beginning balance ............... $120,000

Assets—ending balance .............. $126,000

Preferred dividends ................... $300

Common dividends (paid December 31) .......... $8,000

Common shares outstanding—January 1 .......... 30,000

Common shares outstanding—December 31 ....... 40,000

Average common stockholders’ equity ......... $55,000

Market price per common share ............... $12

Required:

1. Compute the following:

a. Return on sales

b. Return on assets

c. Return on common stockholders’ equity

d. Earnings per share

e. Price-earnings ratio

f. Dividend yield

g. Dividend payout ratio

2. If you were considering purchasing stock in Albion, which of the above ratios would be of most interest to you? Explain.