The Stockholders Equity section of the balance sheet for Cooperstown Corp. at the end of 2010 appears


The Stockholders’ Equity section of the balance sheet for Cooperstown Corp. at the end of 2010 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, 2010, was $24.75 per share.
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?

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
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...
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