The following information has been gathered for Leatroy Manufacturing: Net income ..................$5,000,000 Interest expense .................$400,000 Average total

Question:

The following information has been gathered for Leatroy Manufacturing:

Net income ..................$5,000,000

Interest expense .................$400,000

Average total assets ...............$60,000,000

Preferred dividends ..................$400,000

Common dividends ...............$1,200,000

Average common shares outstanding ..........800,000

Average common stockholders’ equity .........$20,000,000

Market price per common share .............$40

Assume that the firm has no common stock equivalents. The tax rate is 34 percent.

Required:

1. Compute the return on total assets.

2. Compute the return on common stockholders’ equity.

3. Compute the earnings per share.

4. Compute the price-earnings ratio.

5. Compute the dividend yield.

6. Compute the dividend payout ratio.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...