Chapter 11, Problem 6EYCT

(a)

To determine

Compute the earnings per share for year ended after and before purchase of treasury stock.

To determine

Compute the return on common stockholders’ equity for year ended after and before purchase of treasury stock.

To determine

Compute the return on assets ratio for year ended after and before purchase of treasury stock.

To determine

Discuss the change in the company’s profitability over this period.

(b)

To determine

Compute the payout ratio for year ended after and before purchase of treasury stock.

To determine

Compute the average cash dividend paid per share for year ended after and before purchase of treasury stock.

To determine

Discuss the change in these ratios during this period and the implications for the company’s dividend policy.

(c)

To determine

Compute the debt to assets ratio for year ended after and before purchase of treasury stock.

To determine

Compute the times interest earned ratio for year ended after and before purchase of treasury stock.

To determine

Discuss the change in company’s solvency.

(d)

To determine

Discuss to what extent the increased reliance on debts changes in the return on common stockholders’ equity.

(e)

To determine

Explain whether the purchase of treasury stock and the reliance on debt financing was a wise strategic move.