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The income statement, statement of retained earnings, and balance sheet for Somerville Company are as follows: * Includes both state and federal taxes. Refer to the information for Somerville Company on the previous pages. Also, assume that the market price per common share is $8.10. Required: Note: Round answers to four decimal places. 1. Compute the dividends per share. 2. Compute the dividend yield. 3. Compute the dividend payout ratio.

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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
Publisher: Cengage Learning
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
Publisher: Cengage Learning
ISBN: 9781337115773
Chapter 15, Problem 23BEA
Textbook Problem
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The income statement, statement of retained earnings, and balance sheet for Somerville Company are as follows:

Chapter 15, Problem 23BEA, The income statement, statement of retained earnings, and balance sheet for Somerville Company are , example  1

*Includes both state and federal taxes.

Chapter 15, Problem 23BEA, The income statement, statement of retained earnings, and balance sheet for Somerville Company are , example  2

Chapter 15, Problem 23BEA, The income statement, statement of retained earnings, and balance sheet for Somerville Company are , example  3

Refer to the information for Somerville Company on the previous pages. Also, assume that the market price per common share is $8.10.

Required:

Note: Round answers to four decimal places.

  1. 1. Compute the dividends per share.
  2. 2. Compute the dividend yield.
  3. 3. Compute the dividend payout ratio.

1.

To determine

Calculate the dividend per share.

Explanation of Solution

Dividend Payout Ratio:

Dividend payout ratio is a metric that evaluates the profitability of company. It is calculated by dividing the remainder of net income and preference dividend by the common dividend.

Use the following formula to calculate the dividend per share:

Dividend per Share=Value of Common SharesNumber of Common Shares1

Substitute $201,887 for value of common shares and 225,000 for number of common shares in the above formula.

Dividend per Share=$201,887225,000=$0

2.

To determine

Calculate dividend yield.

3.

To determine

Calculate dividend payout ratio.

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Chapter 15 Solutions

Managerial Accounting: The Cornerstone of Business Decision-Making
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