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capital structure at year-end after closing Company P had the following capital structure at year-end after closing. 6% Bonds $10,000,000 3% Preferred Stock 20,000,000 Common Stock ($10 par) 10,000,000 Paid-In Capital in Excess of Par 15,000,000 Retained Earnings 35,000,000 Required: a. The return on common equity was 9%. Determine the net income assuming common stock dividends were declared and paid. b. Using your answer i ...

Other / Other 18 Mar 2016

clothing manufacturer Jazzy Juniors, a retail clothing manufacturer, reported the following profit figures in its 2010 annual report. 2010 2009 Earnings Before Extraordinary Items $1,726,010 $1,646,117 Extraordinary Loss, Net of Tax (346,106) — (Note 1) Net Income $1,379,904 $1,646,117 Basic Earnings Per Share: Before Extraordinary Items $ 3.13 $ 2.99 Extraordinary Loss, Net of Ta ...

Other / Other 18 Mar 2016

Sparrow Company The following data relate to Sparrow Company for the current year. Income before extraordinary item $6,000,000 Less: Preferred stock dividends 100,000 Income available to common stockholders $5,900,000 Extraordinary item (900,000) Net income available to common stockholders $5,000,000 Common shares outstanding on January 1 3,000,000 Issuance of common stock on October 1 400,000 Note: Sparro ...

Other / Other 18 Mar 2016

Earnings In 2010, Revelation, Inc., reported the following statistics. 2010 2009 Basic Earnings Per Share $3.60 $2.70 In 2011, their comparative earnings per share were reported as follows. 2011 2010 2009 Basic Earnings Per Share $3.61 $3.00* $2.25* However, the note referred to by the asterisk (*) was inadvertently omitted. You are informed that the firm is basically the same and that there has been no change in account ...

Other / Other 18 Mar 2016

Diluted Earnings Listed below are several ratios. a. degree of financial leverage b. basic earnings per common share c. price/earnings ratio d. percentage of earnings retained e. dividend payout f. dividend yield g. book value per share Required: Match the letter that goes with each formula. _____ 1. Dividends per Common Share/Diluted Earnings per Share _____ 2. Net Income - Preferred Dividends/(Weighted Average Num ...

Other / Other 18 Mar 2016

Shareholders TRUE/FALSE 1. The degree of financial leverage is the multiplication factor by which debt to equity changes as new debt is issued. 2. Using financial leverage results in a fixed change that can materially affect the earnings available to the common shareholders. 3. The price/earnings ratio expresses the relationship between selling prices of the company's products and the related earnings. 4. A firm might have a ...

Other / Other 18 Mar 2016

viewpoint of stockholders 11. Which of the following is not a true statement regarding stock options? a. They may cause dilution of earnings per share. b. They generally allow the purchase of common stock at favorable terms. c. They involve a compensation expense. d. Exercise improves the short-term liquidity and debt position of the issuing firm. e. The potential dilution can be disregarded in financial analysis. 12. Good Boss I ...

Other / Other 18 Mar 2016

Stable dividend policy 1. Stable dividend policy would most commonly imply: a. a high price/earnings ratio b. a stable dividend yield c. stable dividends per share d. stable earnings per share e. increasing dividends per share 2. Book value per share may not approximate market value per share because: a. the book value is after tax b. book values are based on replacement costs rather than market values c. book value is rela ...

Other / Other 18 Mar 2016

stockholders TRUE/FALSE 1. The percentage of earnings retained is computed by dividing retained earnings by total stockholders' equity. 2. In computing earnings per share, preferred dividends are subtracted from net income. 3. Nonrecurring items such as extraordinary income and disposal of a segment require separate earnings per share disclosure. 4. When a stock split occurs, earnings per share must be adjusted retroac ...

Other / Other 18 Mar 2016

stockholders of companies 1. Which of the following is not a true statement regarding stock options? a. They may cause dilution of earnings per share. b. They generally allow the purchase of common stock at favorable terms. c. They involve a compensation expense. d. Exercise improves the short-term liquidity and debt position of the issuing firm. e. The potential dilution can be disregarded in financial analysis. 2. Good Bos ...

Other / Other 18 Mar 2016