(a)
Introduction:
Analyzing the financial statements allows the stockholders to assess payout. There are four payout ratios i.e. Dividend Yield, Dividend Payout, Stock repurchase Payout and total payout and mainly 2 Stockholder profitability ratios i.e. Return on common equity and earnings per share.
To calculate:
Stockholder payout and profitability ratios.
(b)
Introduction:
Analyzing the financial statements allows the stockholders to assess payout. There are four payout ratios i.e. Dividend Yield, Dividend Payout, Stock repurchase Payout and total payout and mainly 2 Stockholder profitability ratios i.e. Return on common equity and earnings per share.
To interpret:
The given ratios for year 2019 and current year industry average.
Want to see the full answer?
Check out a sample textbook solutionChapter 10 Solutions
Cornerstones of Financial Accounting
- Thompson owns 100% of Rollins and at December 31, 2012, its Investment in Rollins account stands at $10,000,000. On that date, Thompson sells 20% of its ownership for $2,500,000 cash. a. Prepare the journal entry to.be recorded by Thompson on December 31, 2012. b. Same facts as above, except the sales price is $1,000,000 cash. Prepare the journal entry to be recorded by Thompson on December 31, 2012.arrow_forwardFrom the data given, compute the goodwill or gain from bargain purchase for the different items. If CARDO Co purchases the net assets of SYANO Co by issuing 5,000 shares of their P20 par value shares with a fair value of P40 per share, incurs a mortgage loan for P90,000, pays P150,000 cash and paying direct, indirect and stock issue costs of P75,000, P50,000 and P40,000 respective. What is the amount of GOODWILL?arrow_forwardOn January 1, 2024, Clor-Proell Enterprises bought 20% of the outstanding common stock of Chen Construction Company for $600 million cash. Chen's net income for the year ended December 31, 2024, was $300 million. During 2024, Chen declared and paid cash dividends of $60 million. Clor-Proell recorded the investment as follows: PURCHASE General Journal Investment in Chen Construction shares Cash NET INCOME ($ in millions) Debit Credit 600 600 Investment in Chen Construction shares (20% x $300 million) 60 Investment revenue 60 DIVIDENDS Cash (20% x $60 million) 12 12 Investment in Chen Construction shares Required: What would be the pretax amounts related to the investment that Clor-Proell would report in its statement of cash flows for the year ended December 31, 2024? Note: Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Cash outflows should be indicated with a minus sign. Operating activities $ 600 Investing activities $ 60 Financing activities $ 12arrow_forward
- Direction: Analyze the case and give what is asked. On January 2, 20X1, Entity X purchases 75% of the common stock of Entity Y for P250,000. Entity Y has P200,000 and P50,000 common stock and retained earnings, respectively. On December 31, 20X1, Entity X sold equipment to Entity Y for P80,000. The equipment generally costs Entity X P120,000 when purchased four (4) years ago. Moreover, it is depreciated over its life of 10 years using the straight-line method with no residual value. The companies have the following data for years 20X1 and 20X2: Entity X Items 20X1 20X2 Dividends Paid Comprehensive Income from Own Operation Р38,000 147,000 Р60,000 159,000 Entity Y Items 20X1 20X2 Dividends Paid to X P22,500 50,000 P31,500 74,000 Comprehensive Income from Own Operation Required: 1. Prepare the necessary journal and elimination entries that should be made in 20X1 and 20X2 about the sale of equipment. Follow the steps in the handout. 2. Allocate the consolidated comprehensive income for…arrow_forwardFromage purchased 80% of the equity shares in Frais on 1 January 20X1. During the year ended 31 December 20X1, Fromage sold inventory to Frais at a sales price of £50,000. None of the goods remained in Frais' inventory. Fromage applied a margin of 20%. Extracts from the statement of profit or loss for the two entities are shown below: Fromage Frais £000 £000 Revenue 1,000 750 Cost of sales (650) (250) What would be the revenue and cost of sales figures reported in the consolidated statement of profit or loss for the year ended 31 December 20X1? Answer to the nearest £000 a. Revenue 1700 Cost of sales 850 O b. Revenue 1750 Cost of sales 910 O c. Revenue 1700 Cost of sales 860 d. None of these options are correct Revenue 1550 Cost of sales 800arrow_forwardZ Corporation has the following transactions relating to its investment during 2020: Jan 5 Acquired 16,000 shares of Y company for P1,500,000 paying an additional P10,000 for brokerage and P5,000 for commission. Feb 14 Received dividends from Y company declared January 10,2020 to the stockholders of records January 31,2020, P16,000. Required:prepare all the necessary entries assuming the investment is 1. Financial asset at Fair Value through profit and loss 2. Financial asset at Fair Value through other comprehensive incomearrow_forward
- Bar Corporation has been looking to expand its operations and has decided to acquire the assets of Vicker Company and Kendal Company. Bar will issue 30,000 shares of its $10 par common stock to acquire the net assets of Vicker Company and will issue 15,000 shares to acquire the net assets of Kendal Company.Vicker and Kendal have the following balance sheets as of December 31, 2015:Assets Vicker KendalAccounts receivable . . . . . . . . . . . . . . . . . $ 200,000 $ 80,000Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000 85,000Property, plant, and equipment:Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000 50,000Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . .500,000 300,000Accumulated depreciation. . . . . . . . .. . . (150,000) (110,000)Total assets . . . . . . . . . .…arrow_forwardSuppose that AXE company acquires exactly 25% of the voting common stock of Company SARDAR Inc. for $3,000,000 at the beginning of the year 2020. Pfizer company reports $1,200,000 earnings for the year in its net income and pays $550,000 in cash dividends at the end of the year 2020. 1. Using the cost method, what is the investment income and the balance sheet investment account balance respectively for AXE company? * A) $137,500, $3,000,000 B) $300,000; $3,162,500 C) $137,500; $2,300,000 D) None of the above. 2. Using the equity method, what is the investment income and the balance sheet investment account balance respectively for AXE company? * A) $137,500, $3,000,000 B) $300,000; $3,162,500 C) $137,500; $2,300,000 D) None of the above.arrow_forwardShaun Company reports a net income of P280,000 each year and pays an annual cash dividend of P100,000. The company holds net assets of P2,400,000 on January 1, 20x1. Ón that date, Jared Company purchases 40% of the outstanding stock for P1,200,000, which gives it the ability to have joint control with Glassman Company over Shaun. At the purchase date, the excess of Jared's cost over its proportionate share of Shaun's book value was assigned to goodwill. REQUIRED: 5. How much is the net investment income each year? 6. On December 31, 20x2, what is the investment in Shaun Company balance (equity method) in Jared's financial records? Shaun Company reports a net income of P280,000 each year and pays an annual cash dividend of P100,000. The company holds net assets of P2,400,000 on January 1, 20x1. Ón that date, Jared Company purchases 40% of the outstanding stock for P1,200,000, which gives it the ability to have joint control with Glassman Company over Shaun. At the purchase date, the…arrow_forward
- PR Company pays $5,000 in cash and issues stock with a fair value of $30,000 to acquire all of SX Corporation's stock. SX will be a subsidiary of PR. Balance sheet accounts just prior to the acquisition are as follows, in trial balance format: Current assets Property, plant & equipment, net Identifiable intangible assets Current liabilities Long term debt Capital stock Retained earnings Accumulated other comprehensive income Treasury stock Total PR Company Book value Dr (Cr) $7,000 98,000 3,000 Potential contracts with ne customers Advanced production technology Future cost savings Customer lists (8,000) ($1,000) (40,200) (9,000) (800) 1,000 10 Ocredits long-term debt by $1,000. Odebits long-term debt by $4,000. Ocredits long-term debt by $4,000. Odebits long-term debt by $1,000. SX Corporation Book value Fair value Dr (Cr) Dr (Cr) $1,000 9,000 2,000 (800) (5,000) (5,000) (7,500) 800 5.500 50 $2,100 PR's consultants find these items that are not reported on SX's balance sheet: Fair…arrow_forwardPalm Corporation and Staple Company have announced terms of an exchange agreement under which Palm will issue 9,000 shares of its $11 par value common stock to acquire all of Staple Company's assets. Palm shares currently are trading at $55, and Staple $6 par value shares are trading at $19 each. Historical cost and fair value balance sheet data on January 1, 20X2, are as follows: Balance Sheet Item Assets Cash and Receivables Land Buildings and Equipment (net) Total Assets Equities Common Stock Additional Paid-In Capital Retained Earnings Total Equities Palm Corporation Book Value a. Common Stock b. Cash and Receivables c. Land d. Buildings and Equipment (net) e. Goodwill f. Additional paid-In Capital g. Retained Earnings $ 158,000 117,000 307,000 $ 582,000 $ 197,000 18,000 367,000 $ 582,000 Fair Value Amounts $ 158,000 184,000 419,000 $ 761,000 Staple Company Book Value $ 60,000 65,000 163,000 $ 288,000 $ 93,000 8,300 186,700 $ 288,000 Fair Value Required: What amount will be…arrow_forwardFrom the data given, compute the goodwill or gain from bargain purchase for the different items. If CARDO Co purchases the net assets of SYANO Co by issuing 5,000 shares of their P10 par value shares with a fair value of P20 per share, entered into a mortgage loan of P290,000 and paying direct cost and stock issue cost of P50,000 and P20,000 respectively, a P25,000 direct cost and a P50,000 indirect cost however remain unpaid. Compute for the GOODWILL.arrow_forward
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning