Refer to Rhodes Bakery The Company Had No Preferred Shares Throughout the Period Year

question 24

Essay

Refer to Rhodes Bakery.Calculate the following shareholder ratios for Year 3 and Year 2: earnings per share,return on common equity,dividend yield,dividend payout,total payout,and share repurchase payout ratios.Round your answers to two decimal places,then comment on the company's shareholder performance.
Additional information is available below:
$$\begin{array} { l r r } & \text { Year 3 } & \text { Year 2 } \\ \text { Net income }& \$ 24,000 & \$ 28,750 \\\text { Dividends paid }& \$ 1,500 & \$ 875 \\\text { Average number of shares autstanding } & 22,812 & 17,500 \\\text { Closing market price per share } & \$ 24.00 & \$ 18.00\end{array}$$
The company had no preferred shares throughout the period Year 1 through Year 3.At December 31,Year 1,total shareholders' equity was $287,500.

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Definitions:

Net Income

The ultimate earnings a company reports after all deductions, including taxes and expenses, from total income.

Average Common Stockholders' Equity

The average equity held by common shareholders, calculated typically over a year, representing the company's assets minus its liabilities attributable to common shareholders.

Prior Period Adjustment

Adjustments made to the financial statements of a prior period to correct errors or implement changes in accounting policy.

Retained Earnings Account

An equity account on the balance sheet that represents the accumulated net earnings not distributed to shareholders in the form of dividends.