OCloud Corporation’s suite of software products and services provides secure and scalable solutions for global companies. The following is an extract from the company’s 2020 and 2019 comparative income statements and statement of financial position. The market price of OCloud’s common shares was $40.93 and $38.20 on June 30, 2020, and June 30, 2019, respectively. OCloud declared dividends per common share of $0.477 and $0.415 for 2020 and 2019, respectively.

Required

a. Calculate the return on shareholders’ equity for OCloud in 2020. Note that OCloud’s articles of incorporation authorize only common shares. The average return for the shares listed on the Toronto Stock Exchange in a comparable period was 19.8%. What information does your calculation provide an investor?

b. Calculate earnings per share and the price/earnings ratio for the years 2020 and 2019. What does your calculation indicate about OCloud’s earnings?

c. Calculate the dividend payout ratio and the dividend yield for 2020 and 2019. What do the results of these ratios tell us about OCloud?

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OCLOUD CORPORATION Years Ended June 30, 2020, and 2019 (in thousands) 2020 Comparative Income Statement 2019 $2,291,057 Total revenues $1,824,228 Total cost of revenues 762,391 574,000 Total operating expenses 1,175,734 881,665 $ 284,477 Net income $1,025,659 Statement of Financial Position 2020 2019 Total assets $7,480,562 $5,154,144 Total liabilities 3,947,243 3,774,947 Common share capital 1,439,850 817,788 Total shareholders' equity $3,533,319 $1,978,656 Weighted average number of commons shares outstanding 253,879 242,926