Question Details

Assume that all balance sheet amounts for Hiro Company 



1.	The return on common stockholders’ equity is computed by dividing
a.	net income by ending common stockholders’ equity.
b.	net income by average common stockholders’ equity.
c.	net income less preferred dividends by ending common stockholders’ equity.
d.	net income less preferred dividends by average common stockholders’ equity.


2.	Cooney Inc. reported net income of $540,000 during 2014 and paid dividends of $52,000 on common stock. It also has 20,000 shares of 6%, $100 par value preferred stock outstanding. Common stockholders' equity was $2,400,000 on January 1, 2014, and $3,200,000 on December 31, 2014. The company's return on common stockholders' equity for 2014 is:
a.	17.4%
b.	15.0%
c.	13.1%
d.	19.3%


3.	VAS Corporation had net income of $500,000 and paid dividends of $800,000 to common stockholders and $20,000 to preferred stockholders in 2014. VAS Corporation- common stockholders’ equity at the beginning and end of 2014 was $1,740,000 and $2,260,000, respectively.  There are 200,000 weighted-average shares of common stock outstanding.
VAS Corporation- return on common stockholders’ equity was
a.	10%.
b.	24%.
c.	20%.
d.	17.7%.


4.	Ellis Corporation had net income of $500,000 and paid dividends of $100,000 to common stockholders and $20,000 to preferred stockholders in 2014. Ellis Corporation- common stockholders’ equity at the beginning and end of 2014 was $1,740,000 and $2,260,000, respectively.  There are 400,000 weighted-average shares of common stock outstanding.
Ellis Corporation- earnings per share for 2014 was
a.	$6.20.
b.	$1.20.
c.	$1.25.
d.	$5.00.


5.	Assume that all balance sheet amounts for Hiro Company represent average balance figures. 
Stockholders’ equity—common 	$300,000
Total stockholders’ equity	400,000
Sales revenue	200,000
Net income	54,000
Number of shares of common stock	20,000
Common stock dividends	20,000
Preferred stock dividends	8,000
What is the return on common stockholders’ equity ratio for Hiro?
a.	18.0%
b.	15.3%
c.	11.3%
d.	8.7%




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