Fundamentals of Financial Accounting
5th Edition
ISBN: 9780078025914
Author: Fred Phillips Associate Professor, Robert Libby, Patricia Libby
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 11, Problem 11.13ME
Calculating and Interpreting Earnings per Share (EPS) and Return on Equity (ROE)
Academy Driving School reported the following amounts in its financial statements:
| Year 1 | Year 2 | |
| Number of common shares | 11,500 | 11,500 |
| Net income | $ 18,000 | $ 23,000 |
| Cash dividends paid on common stock | $ 3,000 | $ 3,000 |
| Total |
$220,000 | $240,000 |
Calculate EPS and ROE for Year 2. Another driving school in the same city reported a higher net income ($45,000), yet its EPS and ROE ratios were lower than those for the Academy Driving School. Explain how this apparent inconsistency could occur.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
As part of your Portfolio Project due in Module 8, your job is to identify new opportunities for your company. Describe the company and the products and services created by this company. Part of your employment responsibility includes completing the following two reports to support your recommendation for an international expansion:
Conduct a Market Intelligence Assessment: This is a broad overview of the target country. The overview should include information about its political, legal, cultural, economic, and technological characteristics. Provide supporting statistics and indicators for each component of the macroenvironment.
Conduct a Business Environment Analysis: To do so, determine key national characteristics that will affect the marketing of the product. Comment on any potential ethical implications.
Financial accounting
What is the effective after tax interest expense for the firm of this financial accounting question?
Chapter 11 Solutions
Fundamentals of Financial Accounting
Ch. 11 - Prob. 1QCh. 11 - Prob. 2QCh. 11 - Prob. 3QCh. 11 - Explain each of the following terms: (a)...Ch. 11 - What are the differences between common stock and...Ch. 11 - What is the distinction between par value and...Ch. 11 - What are the usual characteristics of preferred...Ch. 11 - What items are included in Accumulated Other...Ch. 11 - What is treasury stock? Why do corporations...Ch. 11 - How is treasury stock reported on the balance...
Ch. 11 - What are the two financial requirements to support...Ch. 11 - What is the difference between cumulative and...Ch. 11 - What is a stock dividend? How does a stock...Ch. 11 - What are the primary reasons for issuing a stock...Ch. 11 - Your company has been very profitable and expects...Ch. 11 - Identify and explain four important dates with...Ch. 11 - Prob. 17QCh. 11 - How do stock repurchases affect the EPS and ROE...Ch. 11 - What is one interpretation of a high P/E ratio?Ch. 11 - Prob. 20QCh. 11 - Which feature is not applicable to common stock...Ch. 11 - Which statement regarding treasury stock is false?...Ch. 11 - Which of the following statements about stock...Ch. 11 - Which of the following is ordered from the largest...Ch. 11 - Prob. 5MCCh. 11 - A journal entry is not recorded on what date? a....Ch. 11 - Prob. 7MCCh. 11 - Prob. 8MCCh. 11 - Prob. 9MCCh. 11 - Equity versus Debt Financing Indicate whether each...Ch. 11 - Computing the Number of Issued Shares Face 2 Face...Ch. 11 - Computing the Number of Unissued Shares The...Ch. 11 - Analyzing and Recording the Issuance of Common...Ch. 11 - Analyzing and Recording the Issuance of No-Par...Ch. 11 - Determining the Effects of Stock Issuance and...Ch. 11 - Determining the Amount of a Dividend Netpass...Ch. 11 - Recording Dividends On May 20, the board of...Ch. 11 - Determining the Impact of a Stock Dividend Sturdy...Ch. 11 - Determining the Impact of a Stock Split Complete...Ch. 11 - Determining the Amount of a Preferred Dividend...Ch. 11 - Determining the Amount of a Preferred Dividend...Ch. 11 - Calculating and Interpreting Earnings per Share...Ch. 11 - Inferring Financial Information Using the P/E...Ch. 11 - (Supplement 11A) Comparing Owner's Equity to...Ch. 11 - (Supplement 11B) Recording a Stock Dividend To...Ch. 11 - Computing Shares Outstanding The 2013 annual...Ch. 11 - Reporting Stockholders' Equity and Determining...Ch. 11 - Preparing the Stockholders' Equity Section of the...Ch. 11 - Reporting the Stockholders' Equity Section of the...Ch. 11 - Determining the Effects of the Issuance of Common...Ch. 11 - Recording and Reporting Stockholders' Equity...Ch. 11 - Finding Amounts Missing from the Stockholders'...Ch. 11 - Recording Treasury Stock Transactions and...Ch. 11 - Prob. 11.9ECh. 11 - Prob. 11.10ECh. 11 - Recording Dividends and Preparing a Statement of...Ch. 11 - Analyzing Stock Dividends On December 31, the...Ch. 11 - Prob. 11.13ECh. 11 - Comparing 100 percent Stock Dividend and 2-for-1...Ch. 11 - Journalizing Cash Dividends Bogscraft Company has...Ch. 11 - Preparing a Statement of Retained Earnings and...Ch. 11 - Determining the Effect of a Stock Repurchase on...Ch. 11 - (Supplement 11 A) Comparing Stockholders' Equity...Ch. 11 - Prob. 11.19ECh. 11 - Analyzing Accounting Equation Effects, Recording...Ch. 11 - Recording Stock Dividends Activision Blizzard,...Ch. 11 - Finding Missing Amounts At December 31, the...Ch. 11 - Prob. 11.4CPCh. 11 - Prob. 11.5CPCh. 11 - Analyzing Accounting Equation Effects, Recording...Ch. 11 - Recording Cash Dividends National Chocolate Corp....Ch. 11 - Finding Missing Amounts At December 31, the...Ch. 11 - Calculating Common and Preferred Cash Dividends...Ch. 11 - Prob. 11.5PACh. 11 - Analyzing Accounting Equation Effects, Recording...Ch. 11 - Prob. 11.2PBCh. 11 - Prob. 11.3PBCh. 11 - Prob. 11.4PBCh. 11 - Prob. 11.5PBCh. 11 - COMPREHENSIVE PROBLEM Financial Reporting of...Ch. 11 - Recording Daily and Adjusting Entries, and...Ch. 11 - Finding Financial Information Refer to the...Ch. 11 - Prob. 11.2SDCCh. 11 - Prob. 11.4SDCCh. 11 - Prob. 11.5SDCCh. 11 - Critical Thinking: Making a Decision asan Investor...Ch. 11 - CC11 Accounting for Equity Financing Nicole has...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- How much is the direct labor efficiency variance?arrow_forwardTo prepare to write your Portfolio Project, create an annotated bibliography by following these steps: 1. Find five credible external sources to support the ideas in your Module 2 Portfolio Milestone draft. A credible source is defined as: a scholarly or peer-reviewed journal article – searching for “intercultural communication theory” in the search box at the top of the CSU Global Library page will take you to a variety of sources that you can use; also, choose a specific theory from our textbook or interactive lectures and search for that term, as well. Some examples of theories you can research, along with research to help you get started, are Hofstede’s Model of Cultural DimensionsLinks to an external site. Face Negotiation TheoryLinks to an external site. Communication Accommodation TheoryLinks to an external site. Anxiety/Uncertainty Management TheoryLinks to an external site. Integrative Communication Theory of Cross-Cultural AdaptationLinks to an external site. Sapir-Whorf…arrow_forwardBuilding from the Module 2 Critical Thinking assignment about your company’s water purification product and target country market, research the components needed to build the product. Use the following questions to guide your decisions about production and components, respond to the following topics for this week’s critical thinking assignment. What does the target country produce and export? What does the target country import; what are the imports used for? To what degree does the target country have relevant and cost-effective component manufacturing capabilities? Does the target country have relevant and cost-effective manufacturing/assembly capabilities to create products of acceptable quality? If the target country does not have relevant component and manufacturing skills, where will the water purification components/devices be sourced from given the target country’s trade agreements? How do trade profiles and trade relationships enter into your decision about manufacturing…arrow_forward
- The actual cost of direct labor per hour is $17.20, and the standard cost of direct labor per hour is $16.80. The direct labor hours allowed per finished unit is 0.6 hour. During the current period, 6,200 units of finished goods were produced using 4,000 direct labor hours. How much is the direct labor efficiency variance? a. $4,320 favorable b. $4,320 unfavorable c. $4,800 favorable d. $4,800 unfavorable e. $4,704 unfavorable Answer thisarrow_forwardanswerarrow_forwardWhat is kurup's total materials variance?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
Century 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:Cengage
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
College Accounting, Chapters 1-27 (New in Account...AccountingISBN:9781305666160Author:James A. Heintz, Robert W. ParryPublisher:Cengage Learning
Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:9781337679503
Author:Gilbertson
Publisher:Cengage
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
College Accounting, Chapters 1-27 (New in Account...
Accounting
ISBN:9781305666160
Author:James A. Heintz, Robert W. Parry
Publisher:Cengage Learning
Financial Accounting
Accounting
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Cengage Learning
Dividend explained; Author: The Finance Storyteller;https://www.youtube.com/watch?v=Wy7R-Gqfb6c;License: Standard Youtube License