The company\'s return on total assets for Year 2 is closest to: 2.09% 1.66% 1.67
ID: 2499283 • Letter: T
Question
The company's return on total assets for Year 2 is closest to:
2.09%
1.66%
1.67%
2.08%
10.
Recher Corporation's common stock has a par value of $3 per share and has been stable at a total value of $270,000 on the company's balance sheet for several years. The total stockholders' equity at the end of this year was $1,023,000 and at the beginning of the year was $1,010,000. Net income for the year was $17,500. Dividends on common stock during the year totaled $4,500. The market price of common stock at the end of the year was $3.76 per share.
The company's dividend yield ratio is closest to:
26.3%
17.1%
1.3%
1.7%
References
Explanation / Answer
(1) Option (2)
Return on total assets = Net income / Average total assets
= $25,100 / $(1,505,000 + 1,520,000) / 2 = $25,100 / $1,512,500 = 1.66%
(10) Correct option (3)
Number of shares = $270,000 / $3 = 90,000
Dividend per share = $4,500 / 90,000 = $0.05
Dividend yield ratio = Dividend per share / Current share price = $0.05 / $3.76 = 0.0133 = 1.33%