Question

Calculate profitability measures The following information was available for the year ended December 31, 2016: Sales...

Calculate profitability measures The following information was available for the year ended December 31, 2016:

Sales $ 400,000
Net income 60,000
Average total assets 1,000,000
Average total stockholders' equity 600,000
Dividends per share 2.40
Earnings per share 6.00
Market price per share at year-end 96.00

Required:

Calculate margin, turnover, and ROI for the year ended December 31, 2016.

Calculate ROE for the year ended December 31, 2016.

Calculate the price/earnings ratio for 2016.

Calculate the dividend payout ratio for 2016.

Calculate the dividend yield for 2016.

Business   Accounting   
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Homework Answers

Answer #1
1
Margin = Net income / Sales 15% =60000/400000
Turnover = Sales / Average total assets 0.4 =400000/1000000
ROI = Margin * Turnover 6% =15%*0.4
2
ROE = Net income / Average total stockholders’ equity 10% =60000/600000
3
Price/Earning ratio = Market price per share / Earnings per share 16 =96/6
4
Dividend payout ratio = Dividends per share / Earnings per share 40% =2.4/6
5
Dividend yield = Dividends per share / Market price per share 2.5% =2.4/96
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