Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883



Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883
Textbook Problem

Profitability and stockholder ratios
Harley-Davidson, Inc. (HOG),

is a leading motorcycle manufacturer in the United States. The company manufactures and sells a number of different types of motorcycles, a complete line of motorcycle parts, and brand-related accessories, clothing, and collectibles.
The following information is available for three recent years (in millions except per-share amounts):

Calculate the following ratios for each year. Round to one decimal place except dollar amounts, which should he rounded to the nearest cent.
a.Return on total assets
b.Return on stockholders' equity
c.Earnings per share
d.Dividend yield
e.Price-earninus ratio using the average price oer share of stock.

To determine


Accounting ratios are used to evaluate the financial performance of the business organisation

Profitability analysis:

Profitability analysis is used to evaluate the ability of a company to generate income relative to revenue, assets, operating cost and shareholders' equity during a specific period.

To calculate:

The profitability and stockholders' ratios.

    formulayear 3year 2year 1
    Rate earned on total assetsNet income /Average total assets x 1007529,760= 7.7% 845 9,467= 8.9% 734 9,288= 7.9%
    Rate earned on stockholders' equityNet Income - preferred stock dividends /average stock holders' equity 7522374= 0.32 845 2,959= 0.29 734 2,784= 0.26
    Earnings per sharenet income / average number of shares outstanding752203= $3

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