Problem 1: The following financial information is available for Cheney Corporation.
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2008
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2007
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Average common stockholders' equity
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$1,200,000
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$900,000
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Dividends paid to common stockholders
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50,000
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30,000
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Dividends paid to preferred stockholders
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20,000
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20,000
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Net income
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290,000
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200,000
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Market price of common stock
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20
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15
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The weighted average number of shares of common stock outstanding was 80,000 for 2007 and 100,000 for 2008.
Instructions:
Calculate earnings per share and return on common stockholders' equity for 2008 and 2007.
Problem 2:
McCoy Corporation has outstanding at December 31, 2008, 50,000 shares of $20 par value, cumulative, 8% preferred stock and 200,000 shares of $5 par value common stock. All shares were outstanding the entire year. During 2008, McCoy earned total revenues of $2,000,000 and incurred total expenses (except income taxes) of $1,200,000. McCoy's income tax rate is 30%.
Instructions: Compute McCoy's 2008 earnings per share.
Problem 3:
SUPERVALU, one of the largest grocery retailers in the United States, is headquartered in Minneapolis. The following financial information (in millions) was taken from the company's 2005 annual report. Net sales $19,543; net income $386; beginning stockholders' equity $2,210; ending stockholders' equity $2,510. Compute the return on common stockholders' equity ratio.
Problem 4:
Fuentes Corporation reported net income of $152,000, declared dividends on common stock of $50,000, and had an ending balance in retained earnings of $360,000. Stockholders' equity was $700,000 at the beginning of the year and $820,000 at the end of the year. Compute the return on common stockholders' equity.