Question

This financial information is available for Ivanhoe Corporation. 2020 2019 Average common stockholders’ equity $1,850,000 $2,010,000 Dividends paid to common stockholders 86,000 71,500 Dividends paid to preferred stockholders 24,500 24,500 Net income 292,000 242,000 Market price of common stock 18 26 The weighted-average number of shares of common stock outstanding was 182,500 for 2019 and 152,500 for 2020.

Calculate earnings per share and return on common stockholders’ equity for 2020 and 2019. (Round answers to 2 decimal places, e.g. 10.50% or $10.50.)

Answer 1

Answer-Return on common stockholder’s equity=(Net income- Preferred dividends)/Average common stockholder’s equity

2020= {(292000 - $24500)/$1850000}

= ($267500/$1850000)*100

= 14.46%

2019 ={($242000 - $24500)/$2010000}

= ($217500/2010000)*100

= 10.82%

Answer- Earning per Share = (Net Income – Preferred Dividends) / Weighted Average number of Common shares outstanding

2020= {$(292000 - $24500)/152500 shares}

= $267500/152500 shares

= $1.75 per share

2019 =($242000 - $24500)/182500 shares

= $217500/182500 shares

= 1.19 per share