1. How many shares should the company have outstanding in 2012 if its earnings available for common stockholders in that year are $1,200,000 and it pays a dividend of $2.00, given that its desired payout ratio is 40%?2. How many shares would Harte have to repurchase to have the level of shares outstanding calculated in no.6? Harte Textiles, Inc., a maker of custom upholstery fabrics, is concerned about preserving the wealth ofits stockholders during a cyclic downturn in the home furnishings business. The company hasmaintained a constant dividend payout of $2.00 tied to a target payout ratio of 40%. Management ispreparing a share repurchase recommendation to present to the firm's board of directors. Thefollowing data have been gathered from the last two years:2011Earnings available for common stockholdersNumber of shares outstandingEarnings per shareMarket price per sharePrice/earnings ratio$1,260,000300,000$4.20$23.505.62012$1,200,000300,000$4.00$20.005.0

Earning Available to Common Stockholder $ 12,00,000 Dividend Payout Ratio 40%…

1. How many shares should the company have outstanding in 2012 if its earnings available for common stockholders in that year are $1,200,000 and it pays a dividend of $2.00, given that its desired payout ratio is 40%? 2. How many shares would Harte have to repurchase to have the level of shares outstanding calculated in no.6?

1. How many shares should the company have outstanding in 2012 if its earnings available for common stockholders in that year are $1,200,000 and it pays a dividend of $2.00, given that its desired payout ratio is 40%? 2. How many shares would Harte have to repurchase to have the level of shares outstanding calculated in no.6?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 20P

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