Exercise 12-82
Stockholder Ratios
Financial statements for Steele Inc. follow.
Steele Inc. | |||||||
Consolidated Income Statements | |||||||
(in thousands except per share amounts) | |||||||
2019 | 2018 | 2017 | |||||
Net sales | $7,245,088 | $6,944,296 | $6,149,218 | ||||
Cost of goods sold | (5,286,253) | (4,953,556) | (4,355,675) | ||||
Gross margin | $1,958,835 | $1,990,740 | $1,793,543 | ||||
General and administrative expenses | (1,259,896) | (1,202,042) | (1,080,843) | ||||
Special and nonrecurring items | 2,617 | 0 | 0 | ||||
Operating income | $701,556 | $788,698 | $712,700 | ||||
Interest expense | (63,685) | (62,398) | (63,927) | ||||
Other income | 7,308 | 10,080 | 11,529 | ||||
Gain on sale of investments | 0 | 9,117 | 0 | ||||
Income before income taxes | $645,179 | $745,497 | $660,302 | ||||
Provision for income taxes | (254,000) | (290,000) | (257,000) | ||||
Net income | $391,179 | $455,497 | $403,302 |
Steele Inc. | |||||
Consolidated Balance Sheets | |||||
(in thousands) | |||||
ASSETS | Dec. 31, 2019 | Dec. 31, 2018 | |||
Current assets: | |||||
Cash and equivalents | $320,558 | $41,235 | |||
Accounts receivable | 1,056,911 | 837,377 | |||
Inventories | 733,700 | 803,707 | |||
Other | 109,456 | 101,811 | |||
Total current assets | $2,220,625 | $1,784,130 | |||
Property and equipment, net | 1,666,588 | 1,813,948 | |||
Other assets | 247,892 | 248,372 | |||
Total assets | $4,135,105 | $3,846,450 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||
Current liabilities: | |||||
Accounts payable | $250,363 | $309,092 | |||
Accrued expenses | 347,892 | 274,220 | |||
Other current liabilities | 15,700 | 0 | |||
Income taxes | 93,489 | 137,466 | |||
Total current liabilities | $707,444 | $720,778 | |||
Long-term debt | 650,000 | 541,639 | |||
Deferred income taxes | 275,101 | 274,844 | |||
Other long-term liabilities | 61,267 | 41,572 | |||
Total liabilities | 1,693,812 | 1,578,833 | |||
Stockholders’ equity: | |||||
Preferred stock | $100,000 | $100,000 | |||
Common stock | 89,727 | 89,727 | |||
Additional paid-in capital—common stock | 128,906 | 127,776 | |||
Retained earnings | 2,397,112 | 2,136,794 | |||
$2,715,745 | $2,454,297 | ||||
Less: Treasury stock, at cost | (274,452) | (186,680) | |||
Total stockholders’ equity | $2,441,293 | $2,267,617 | |||
Total liabilities and stockholders’ equity | $4,135,105 | $3,846,450 |
Use the information provided above and below to respond to the
following requirements.
Year ended December 31, | ||
Item | 2019 | 2018 |
Average number of common shares outstanding (thousands) | 362,202 | 364,398 |
Preferred dividends (thousands) | $24,000 | $24,000 |
Dividends per common share | 0.36 | 1.54 |
Common dividends (thousands) | 130,861.00 | 561,172.30 |
Common stock repurchases | 0 | 0 |
Market price per share: | ||
High | 83.25 | 79.10 |
Low | 63.25 | 59.00 |
Close | 78.42 | 66.36 |
At January 1, 2018, total stockholders' equity was $2,083,122 and there was no preferred stock.
Required:
1. Compute the earnings per share, return on common equity, dividend yield ratio, and dividend payout ratio (in percentage terms, rounded to two decimal places except for EPS, which should be rounded to nearest cent) for 2018 and 2019.
2019 | 2018 | |||
Earnings per share | $fill in the blank 1 | $fill in the blank 2 | ||
Return on common equity | % |
2019 | 2018 | |
Earnings Per Share | ||
Net Income attributable to Common Stockholders before Common Dividend (Refer Note 1) |
$367,179 | $431,497 |
Divide by: Average number of Common Shares Outstanding | 362202 | 364398 |
Earnings Per Share | $1.01 | $1.18 |
Note 1 - | 2019 | 2018 |
Net Income | $391,179 | $455,497 |
Less: Preferred Dividend | $24,000 | $24,000 |
Net Income attributable to common stockholders | $367,179 | $431,497 |
Return on Common Equity | ||
Net Income attributable to common stockholders (Refer Note 1) | $367,179 | $431,497 |
Divide by: Average Common Stockholders' Equity Fund (Refer Note 1) | $2,254,455 | $2,125,370 |
Return on Common Equity | 16.3% | 20.3% |
Note 2 -- | 2019 | 2018 |
Ending Common Equity (Total Stockholdes Equity - Preffered Stock) | $2,341,293 | $2,167,617 |
Beginning Common Equity (Total Stockholdes Equity - Preffered Stock) | $2,167,617 | $2,083,122 |
Average Common Equity (Ending+Beg)/2 | $2,254,455 | $2,125,370 |
Dividend Yield Ratio | ||
Dividend Per Common Share | $0.36 | $1.54 |
Market Price Per Share | $78.42 | $66.36 |
Dividend Yield Ratio (Dividend Per Share / Market Price Per Share x 100) | 0.46% | 2.32% |
Dividend Payout Ratio | ||
Dividend Per Share | $0.36 | $1.54 |
Earnings Per Share | $1.01 | $1.18 |
Dividend Payout Ratio (DPS / EPS x 100) | 35.51% | 130.05% |
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