Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Financial Ratios
A Ratio refers to a figure calculated as a reference to the relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, or the number of times. When the number is determined by taking two accounting numbers derived from the financial statements, it is termed as the accounting ratio.
Return on Equity
The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.
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Transcribed Image Text:**MK Company Financial Overview**
Here's a summary of key financial data for MK Company:
- **Preferred Shares at 8% Par Value $50:**
- Current Year: $250,000
- Prior Year: $250,000
- **Common Shares, Par Value $10:**
- Current Year: $500,000
- Prior Year: $500,000
- **Retained Earnings at End of Year:**
- Current Year: $257,000
- Prior Year: $240,000
- **Net Income:**
- Current Year: $102,000
- Prior Year: $90,000
- **Dividends Paid on Preferred Shares:**
- Both Years: $20,000
- **Dividends Paid on Common Shares:**
- Current Year: $65,000
- Prior Year: $60,000
- **Quoted Market Price per Common Share at Year-End:**
- Current Year: $25.00
- Prior Year: $20.00
- **Dividend Payout Ratio for Prior Year:**
- Options: 85.7%, 114.3%, 140.0%, 55.6%
This data provides insights into the company's share structure, earnings distribution, and dividend policies over the past two years, providing a foundation for evaluating financial performance and shareholder value.
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