*Pleases SHOW HOW TO SOLVE this Shull Corporation\'s most recent balance sheet a

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*Pleases SHOW HOW TO SOLVE this

Shull Corporation's most recent balance sheet and income statement appear below:
Shull corporation statement of Financial position
December 31, Year 2 and Year 1 (dollars in thousands)

Current assets....................................Year 2.....Year 1
Cash................................................$ 180......$ 150
Accounts Receivable.............................200.........190
Inventory............................................140.........140
Prepaid expenses.................................100.........90
=
Total current assets..............................620.........570
Plant & equipment, net..........................780.........800
=
Total assets.....................................$1,400.....$1,370

Current liabilities:
Accounts payable................................$ 110......$ 130
Accrued liabilities...................................80..........70
Notes payable, short term.......................60..........60
=
Total current liabilities...........................250.........260
Bonds payable......................................220.........240
=
Total liabilities......................................470.........500

Stockholders' equity:
Preferred stock, $100 par value, 5%..........200..........200
Common Stock, $2 par value....................400...........400
Additional paid-in capital--common stock...100...........100
Retained earnings...................................230...........170
=
Total stockholders' equity........................930...........870
=
Total liabilities & stockholders equity......$1,400.......$1,370



Shull Corporation Income Statement
For the Year Ended December 31, Year 2 (Dollars in thousands)

Sales (all on account)....................$1,130
Cost of goods sold..........................700
=
Gross margin..................................430
Selling and administrative expense....244
=
Net operating income.......................186
Interest expense.............................29
=
Net income before taxes..................157
Income taxes (30%)........................47
=
Net income..................................$110

Dividends on common stock during Year 2 totaled $40 thousand. Dividends on preferred stock total $10 thousand. The market price of common stock at the end of the year 2 was $9.80 per share.

Find the Return on total assets.

Explanation / Answer

Dividends on common stock during Year 2 totaled $40 thousand. Dividends on preferred stock total $10 thousand. The market price of common stock at the end of the year 2 was $9.80 per share.

1. Gross margin percentage:

430/110= 0.38 = 38%

2. Earnings per share (of common stock):

$110,000 - $10,000 = $100,000/ 200000 = $0.50

3. Price-earnings ratio:

9.80/.50=19.6

4. Dividend payout ratio:

$40/200 = $0.20

$0.20/ $0.50 = 40.0%

5. Dividend yield ratio:

$0.20/$9.80 = 2.04%

6. Return on total assets:

($1,400 + $1,370)/ 2 = $1,385

$110 + [$29 x (1-0.30)] = $130.3

$130.3/$1,385 = 9.41%

7. Return on common stockholders

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