Question

The financial statements of Friendly Fashions include the following selected data (in millions):      ($ in...

The financial statements of Friendly Fashions include the following selected data (in millions):
  

  ($ in millions) 2018 2017
  Sales $ 8,343 $ 9,434
  Net income $ 170 $ 648
  Stockholders' equity $ 1,780 $ 2,220
  Average Shares outstanding (in millions) 710 -
  Dividends per share $ .28  
  Stock price $ 8.00 -


Required:
Calculate the following ratios for Friendly Fashions in 2018. (Enter your Dividend yield and Price-earning ratio values to two decimal places. Enter your answer in millions (i.e. 5,500,000 should be entered as 5.5).)
  
Business   Accounting   
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Homework Answers

Answer #1

Net Income

÷

Average stockholders' equity

=

Return on equity

$170

÷

$2000

=

8.5%

Dividend per share

÷

Dividend yield

Stock price

=

Dividend yield

$.28

÷

$8.00

=

3.5%

Net income

÷

Earnings per share

Average shares outstanding

=

Earnings per share

$170

÷

$710

=

0.23

Stock price

÷

Price ­earnings ratio

Earnings per share

=

Price ­earnings ratio

$8.00

÷

0.23

=

35

Explanation:

Average stockholders' equity ($2220 + $1780)/2 = $2000

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