Selected financial information for Buckeye Corp. is as follows: Year 1 Year 2 St

Question

Selected financial information for Buckeye Corp. is as follows:

                                                           Year 1      Year 2
Stockholders' equity:
Preferred Stock, $10 par, 10%                $200,000 $200,000
Common Stock, $10 par                          250,000    250,000
Additional paid-in capital common stock 100,000    100,000
Retained Earnings                                  1,800,000 2,120,000
Total stockholders' equity                       2,350,000  2,670,000
Total liabilities and stockholder's equity  3,650,000 4,020,000
Net Income           320,000

Additionally we know that cash dividends declared and paid during Year 2 totaled $175,000, of which $20,000 were preferred dividends. The market price of a share of common stock on Decemeber 31, Year 2 was $146.

Use the above information to calculate the return on common stockholders equity for Year 2.

Explanation / Answer

300000 / 2310000 = .13
Return on common stockholders equity = .13

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