ACCTG 211 Lecture Notes - Lecture 13: Net Income

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cerisegiraffe538

23 Oct 2015

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Acctg 211 - lecture 13 - accounting for shareholder"s equity review. Return on equity (roe) measures the amount of income earned with each dollar of common shareholders" investment in the firm. Roe = (net income - preferred dividends)/average common equity. Earnings per share is used to predict future dividends and stock prices. It measures the per-share portion of net income of each common shareholder. (eps reported on. Earnings per share = (net income - preferred dividends)/weighted average number of. If only change: net income increases, then earnings per share will increase.

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Quantitative Reasoning Problem 2

ACC 122

Assignment is to be completed as a Word Document, PDF, or on notebook paper and submitted through Moodle

The table below contains letters a, b, c, d.

	2018	2017
Average common stockholder equity	$1,800,000	$1,900,000
Dividends paid to common shareholders	90,000	70,000
Dividends paid to preferred shareholders	20,000	20,000
Net Income	290,000	248,000
Market Price of common stock	$20	$25
Weighted average number of shares common stock outstanding	150,000	180,000
Earnings per share	(a)	(b)
Return on common stockholders equity	(c)	(d)

Tell what these formulas are used for : Earnings per share; Return on common stockholder equity

Show all your computations or calculations for each of the letters (a), (b), (c ) (d)

Provide a sentence of explanation for each answer telling why you did what you did

Quantitative Reasoning Problem 2

ACC 122

Assignment is to be completed as a Word Document, PDF, or on notebook paper and submitted through Moodle

The table below contains letters a, b, c, d.

	2018	2017
Average common stockholder equity	$1,800,000	$1,900,000
Dividends paid to common shareholders	90,000	70,000
Dividends paid to preferred shareholders	20,000	20,000
Net Income	290,000	248,000
Market Price of common stock	$20	$25
Weighted average number of shares common stock outstanding	150,000	180,000
Earnings per share	(a)	(b)
Return on common stockholders equity	(c)	(d)

Tell what these formulas are used for : Earnings per share; Return on common stockholder equity

Show all your computations or calculations for each of the letters (a), (b), (c ) (d)

Provide a sentence of explanation for each answer telling why you did what you did

copperrhinoceros213

Based on the financial information provided, calculate thefollowing ratios and explain their purpose:

Current Ratio
Inventory Turnover Ratio
Accounts Receivable Turnover Ratio Debt to Equity Ratio
Return on Assets Ratio
Asset Turnover Ratio
Return on Equity Ratio
Profit Margin Ratio
Price-Earnings Ratio
Dividend Yield Ratio

Note: When a balance sheet amount is related toan income statement amount in computing a ratio, the balance sheetamount should be an average of that period. The average iscalculated by adding the ending balances of this year and last yearand dividing the result by 2. Describe how a bank lending officermight use ratio analysis. Select five ratios that would be mostuseful for the purpose and explain the rationale for yourselection.

	12/31/10	12/31/09
	Amount in Dollars	Amount in Dollars
Cash	200.00	150.00
Receivables	500.00	350.00
Inventories	750.00	755.00
Other Current Assets	100.00	75.00
Total Current Assets	1,550.00	1,330.00
Plant and Equipment	1,100.00	1,170.00
Other Long - Term Assets	150.00	100.00
Total Assets	2,800.00	2,600.00
Accounts Payable	510.00	400.00
Other Current Liabilities	25.00	25.00
Total Current Liabilities	535.00	425.00
Long Term Debt	375.00	400.00
Other Long Term Liabilities	225.00	175.00
Preferred Stock	250.00	250.00
Shareholders' Equity	1,415.00	1,350.00
Total Liabilities and Shareholders' Equity	2,800.00	2,600.00

	Year-2010	Year-2009
	Amount in Dollars
Net Sales	3500.00	3200.00
Cost of Goods Sold	2200.00	2100.00
Other Expenses	300.00	250.00
Depreciation	77.00	62.00
Interest Expenses	40.00	46.00
Tax	200.00	150.00
Net Income	683.00	592.00
Preferred Stock Dividend	25.00
Common Stock Dividends	260.00
Market Value of Equity	4000.00
Average Number of Shares	100.00
Share Price	40.00
Dividends per Share	2.60
Earnings per Share	6.58

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ACCTG 211 Lecture Notes - Lecture 13: Net Income

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