LO 11-2, 11-5E11-17 Determining the Effect of a Stock Repurchase on EPS and ROESwimtech Pools Inc. (SPI) reported the following in its financial statements for the quarter endedMarch 31, 2021.Common Stock, $1 par, 50,000 shares issued and outstandingAdditional Paid-In CapitalRetained EarningsTotal Stockholders' EquityDecember 31, 2020$ 50,00030,00020,000$100,000March 31, 2021$ 50,00030,00020,000$100,000During the quarter ended March 31, SPI reported Net Income of $5,000 and declared and paid cashdividends totaling $5,000.Required:1. Calculate earnings per share (EPS) and return on equity (ROE) for the quarter endedMarch 31.2.Assume SPI repurchases 10,000 of its common stock at a price of $2 per share on April 1,2021. Also assume that during the quarter ended June 30, 2021, SPI reported Net Income of$5,000 and declared and paid cash dividends totaling $5,000. Calculate earnings per share(EPS) and return on equity (ROE) for the quarter ended June 30, 2021.3. Based on your calculations in requirements 1 and 2, what can you conclude about the impactof a stock repurchase on EPS and ROE?

EPS EPS is an abbreviated form of earnings per share that determines the share value of common…

Answered: Swimtech Pools Inc. (SPI) reported the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Rancho Cucamonga, Inc. presents the following excerpts from its December 31, 2020 balance sheet: Long-Term Liabilities: Note payable, 8% $200,000 Bonds payable, 10% 1,000,000 Shareholders’ Equity Common stock, par 50,000 Additional paid-in-capital, common stock 350,000 Total contributed capital 400,000 Retained earnings 250,000 Total shareholders’ equity 650,000 The accounting department also conveys the following information: Risk-free rate of return - 3% Risk premium - 4.05% Tax rate – 30% Requirement: Compute Rancho Cucamonga’s weighted average cost of capital.
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GM has the following balances at Dec31,2021: Operating Assets $ 1,200,000 Financial Assets 800,000 Operating Liabilities 200,000 Financial liabilities 1,400,000 Operating Income 200,000 Tax Rate % 40 Net Income 110,000 Preferred Stock dividends 10,000 Required: Calculate the following (use 2021 ending balances only): Return on Net Operating Assets – RNOA Return on Common Equity – ROCE Justify and analyze your findings in required (1)
Pharoah Inc. began operations in January 2018 and reported the following results for each of its 3 years of operations. $36,000 net loss 2020 2018 $283.000 net loss 2019 At December 31, 2020, Pharoah Inc. capital accounts were as follows. 9% cumulative preferred stock, par value $100; authorized, issued. and outstanding 5,300 shares Common stock, par value $1.00; authorized 1,000,000 shares; issued and outstanding 758,000 shares $746,000 net income Book value per share $ $530,000 $758,000 Pharoah Inc. has never paid a cash or stock dividend. There has been no change in the capital accounts since Pharoah began operations. The state law permits dividends only from retained earnings. (a) Compute the book value of the common stock at December 31, 2020. (Round answers to 2 decimal places, e.g. $38.50.) Book value per share $ (b) Compute the book value of the common stock at December 31, 2020, assuming that the preferred stock has a liquidating value of $107 per share. (Round answers to 2…
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Blabla Grocery Inc., reported the following financial information on December 31, 2019: Common shares issued and outstanding throughout 2019 700,000 shares 6% nonconvertible cumulative preferred shares capital $450,000 Retained Earnings on January 1. 2019 $3,500,000 Basic EPS for 2019 $0.99 per share In addition, the company did not declare any dividends for either 2018 or 2019. The amount which the company would report as Retained Earnings on December 31, 2019 would be: Select one: a. $673,000. b. $693,000. c. $4,220,000. d. $4,173,000. e. $4,166,000.
Sycip was tasked to analyze the earnings performance of Alamo Transport Corporation. The following data were gathered from Alamo's financial statements and from a report of the closing market prices of shares: Profit for 2020 6,643,000 Preference dividends declared during 2020 600,000 Ordinary dividends declared Dec 31, 2020 2,620,000 Number of Alamo ordinary shares outstanding: 01-Jan-20 1,500,000shares 31-Dec-20 1,600,000shares Market price per ordinary share on Dec 31, 150 2015 Calculate the following ratios relating to the Alamo share: 1. Basic earnings per ordinary share 2. Price-earnings ratio I
Amy Dyken, controller at Shamrock Pharmaceutical Industries, a public company, is currently preparing the calculation for basic and diluted earnings per share and the related disclosure for Shamrock’s financial statements. Below is selected financial information for the fiscal year ended June 30, 2020. Long-term debt Notes payable, 10% $990,000 9% convertible bonds payable 5,040,000 10% bonds payable 6,080,000 Total long-term debt $12,110,000 Shareholders’ equity Preferred stock, 5% cumulative, $50 par value, 104,000 shares authorized, 26,000 shares issued and outstanding $1,300,000 Common stock, $1 par, 10,000,000 shares authorized, 1,000,000 shares issued and outstanding 1,000,000 Additional paid-in capital 3,990,000 Retained earnings 6,090,000 Total shareholders’ equity $12,380,000 The following transactions have also occurred at Shamrock. 1. Options were granted on July 1, 2019, to purchase 180,000 shares at $15…
Below is the financial data for Arla Inc. for the year ended December 31, 2020: Market price per share... Net Income...... $150.00 $1,750,000 Preferred Dividends declared... $75,000 Average # of common shares....... Dividends per share...... Average common shareholders' equity..... Total assets..... Total Liabilities... Accumulated Other Comprehensive Income..... 100,000 $2.50 10,000,000 $22,500,000 $11,675,000 $185,000 Instructions Calculate the Return on shareholders' equity (use up to 2 decimal places and do not include a % sign)
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The shareholders’ equity section of Superior Corporation’s balance sheet as of December 31, 2018, is as follows: 1. Prepare journal entries for each of the above transactions. 2. Calculate the number of authorized, issued, and outstanding common shares as of December 31, 2019. 3. Calculate Superior’s legal capital at December 31, 2019.
The following comparative statements of stockholders’ equity are prepared for Nolan Corporation: Jan.1,2015 Jan.1,2017 Jan.1,2019 Common stock ($10 par). . . . . . . $300,000 $300,000 $300,000 Paid-in capital in excess of par . . . 60,000 60,000 60,000 Retained earnings . . . . . . . . . . . . . . . 42,000 120,000 Total . . . . . . . . . . . . . . . . . . . . . . . . . .$360,000 $402,000 $480,000 Less treasury stock (at cost) . . . . (75,000) (75,000) Total stockholders’ equity. . . . . . $360,000 $327,000 $405,000 Tarman Corporation acquires 60% of Nolan Corporation common stock for $12 per share on January 1, 2015, when the latter corporation is formed. On January 1, 2017, Nolan Corporation purchases 5,000 shares of its own common stock from…

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