Profitability Analysis and Analytical Issues Paper 5

1

Rinker Corporation had 40,000 shares of common stock outstanding on November 30, Year 1. On May 20, Year 2, a 10% stock dividend was declared and distributed. On June 1, Year 2, Rinker issued options to its existing stockholders giving them the immediate right to acquire one additional share of stock for each share of stock held. The option price of the additional share was $6 per share, and no options have been exercised as of year end The average price of Rinker’s common stock for the year was $20 per share. The price of the stock as of November 30, Year 2, the end of the fiscal year, was $30 per share, and the company’s net income for the fiscal year was $229,680.Rinker had no outstanding debt during the year, and its tax rate was 30%. The basic earnings per share (rounded to the nearest cent) of Rinker common stock for the fiscal year ended November 30, Year 2, was






2

A drop in the market price of a firm’s common stock will immediately increase its






3

Watson Corporation computed the following items from its financial records for the year:
Price-earnings ratio 12
Payout ratio 0.6
Asset turnover ratio 0.9
The dividend yield on Watson’s common stock is






4

An increase in the market price of a company’s common stock will immediately affect its






5

For the most recent fiscal period, Oakland, Inc., paid a regular quarterly dividend of $0.20 per share and had earnings of $3.20 per share. The market price of Oakland stock at the end of the period was $40.00 per share. Oakland’s dividend yield was






6

The dividend yield ratio is calculated by which one of the following methods?






7

Mayson Company reported net income of $350,000 for last year. The company had 100,000 shares of $10 par value common stock outstanding and 5,000 shares of common stock in treasury during the year. Mayson declared and paid $1 per share dividends on common stock. The market price per common share at the end of last year was $30.The company’s dividend yield for the year was A. B. C. D.






8

Douglas Company purchased 10,000 shares of its common stock at the beginning of the year for cash. This transaction will affect all of the following except the






9

Mayson Ltd. reported net income of £3,500,000 for last year. The company had 100,000 shares of common stock outstanding with a par value of £1 and 5,000 shares of common stock in treasury during the year. Mayson declared and paid dividends of £1 per share on its common stock. The market price per common share at the end of last year was £30, while the book value per common share was £10. The company’s dividend yield for the year was






10

A corporation has an earnings yield of 12% and a dividend yield of 3%. What is its dividend payout ratio?






Result

Total Questions:
Correct Answers:
Wrong Answers:
Percentage: