This 8 pts 4 of 11 (4 complete) This Test: 100 pts possible di Volimer, Inc. had

Question

This 8 pts 4 of 11 (4 complete) This Test: 100 pts possible di Volimer, Inc. had reporied the following balances: (C?ck te ontowow to 2016 and 2017balne.) 10. Compute Vollmers eamings per shane for 2017 11. Compule Vollmer's priosleamings raio for 2017, assuming the market price in 540 per share 12. Compule Vollmers rote of retun on common slockholders' equity for 2017 10. Compute Volmers eamings per Select the formula, then enter the amo per share to the nearest cent) Darta Table stockholdenst equity, shrs shares. Round earmings Oecember 31, 2017 Decemfer 31, 2016 Net Income Prefemed Dividends Total Stockholders' Equity Stockholdens Equity atrbulable to Preferned Stock Number of Common Shares Outstandg 80,000 2,000 40,000 20,000 0,000 5,000 310,000 20,000 11. Compute Vollmers pric leamings stockholders' equity, shrs- shares Round the ratio to two decimal places) Print Done os.odstndrg. SE " ?0kholders' eqity. ??? " Select the formula, then entor the amou thares. Round your anewer to the rea Rate of retum on common SE Choose from any list or enter any number in the input Selds and then continue so the next question

Explanation / Answer

Solution 10:

Earning per share = Earning available for common shareholders / Average outstanding common shares

Average outstanding shares = (10000+14000)/2 = 12000

Earning available for equity shareholders = $80000 - $2000 = $78000

Earning per share = $78000/12000 = $6.50 per share

Solution 11:

Market price per share = $40

Price earning ratio = Market price per share / Earning per share = $40 / $6.50 = 6.15 times

Solution 12:

Return on common shareholder's equity = Earning available for equity shareholders / Average common shareholder equity

Common shareholder equity for 2017 = $340,000 - $20,000 = $320,000

Common shareholder equity for 2016 = $310,000 - $20,000 = $290,000

Average common shareholder equity = ($320,000 + $290,000)/2 = $305,000

Return on common shareholder equity = $78,000 / $305,000 = 25.57%

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