During 2018, Rooney Corporation reported after-tax net income of $3,620,000. Dur

Question

During 2018, Rooney Corporation reported after-tax net income of $3,620,000. During the year, the number of shares of stock outstanding remained constant at 9,840 of $100 par, 10 percent preferred stock and 399,000 shares of common stock. The company’s total stockholders’ equity is $19,700,000 at December 31, 2018. Rooney Corporation’s common stock was selling at $50 per share at the end of its fiscal year. All dividends for the year have been paid, including $4.50 per share to common stockholders. Required Compute the earnings per share. (Round your answer to 2 decimal places.) Compute the book value per share of common stock. (Round your answer to 2 decimal places.) Compute the price-earnings ratio. (Round intermediate calculations and final answer to 2 decimal places.) Compute the dividend yield. (Round your answer to 2 decimal places. (i.e., .2345 should be entered as 23.45).)

Explanation / Answer

Net income after tax = $3620000

Outstadnig Preferred stock = 9840

common stock = 399000

Earnings per share = Earnings available to equity stockholders / Number of common stock outstanding

= (3620000 - 98400 ) / 399000

=$ 8.83 per share

Book value per share = [19700000 / 399000]

= 49.37

Price earning ratio = Market value per share / Earnings per share

= $ 50 / 8.83

= 5.66

Dividend yield = Dividend / Current stock price

= $4.5 / 50

= 0.09 or 9%

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