Comparative financial statements for Springville Company for the last two years appear below.The market price of Springville's common shares was $25 per share on December 31,Year 2.During Year 2,dividends of $2,000,000 were paid to preferred shareholders and $10,000,000 to common shareholders.

Required:
Calculate the following for Year 2:
a)Dividend payout ratio.
b)Dividend yield ratio.
c)Price-earnings ratio.
d)Accounts receivable turnover.
e)Inventory turnover.
f)Return on total assets.
g)Return on common shareholders' equity.
h)Was financial leverage positive or negative for the year? Explain.

Question

Comparative financial statements for Springville Company for the last two years appear below.The market price of Springville's common shares was $25 per share on December 31,Year 2.During Year 2,dividends of $2,000,000 were paid to preferred shareholders and $10,000,000 to common shareholders.

Required:
Calculate the following for Year 2:
a)Dividend payout ratio.
b)Dividend yield ratio.
c)Price-earnings ratio.
d)Accounts receivable turnover.
e)Inventory turnover.
f)Return on total assets.
g)Return on common shareholders' equity.
h)Was financial leverage positive or negative for the year? Explain.

Quizplus · Accepted Answer

The Answer of Comparative financial statements for Springville Company for the last two years appear below.The market price of Springville's common shares was $25 per share on December 31,Year 2.During Year 2,dividends of $2,000,000 were paid to preferred shareholders and $10,000,000 to common shareholders.

Required:
Calculate the following for Year 2:
a)Dividend payout ratio.
b)Dividend yield ratio.
c)Price-earnings ratio.
d)Accounts receivable turnover.
e)Inventory turnover.
f)Return on total assets.
g)Return on common shareholders' equity.
h)Was financial leverage positive or negative for the year? Explain.

Comparative Financial Statements for Springville Company for the Last Two