Calculate the payout ratio, earnings per share, and return on common stockholders' equity. (Round earning per share to 2 decimal places, e. g. $2.66 and all other answers to 1 decimal place. 17.5%.) Payout ratio % Earnings per share $ Return on common stockholders' equity %

Payout Ratio 69.9%

Earning Per Share $0.94

Return on the Common Stockholder Equity 12.6%

Explanations:-

Monty Corp

1. Calculation for Payout Ratio

Using this formula

Payout Ratio = Dividend Declared/Net Income

Dividend Declared = $0.70 * Shares outstanding

Shares outstanding:-

Opening ($837,500/$3) = 279,167

Issued on Feb 1 5310

Treasury (4900)

Purchased Treasury on March 20 (1300)

Shares outstanding 278,277

Dividend Declared = 278277 * $0.70

= $194,793.90

Net Income = $278600

Payout Ratio = $194793.90/$278600 = 69.9%

Therefore Payout Ratio will be 69.9%

2. Calculation for Earning Per Share

Using this formula

Earning Per share = (Net Income - Preference Dividend) / Avg Common Stock shares

Net Income = $2786,00

Preference Dividend = $294,000 * 6%

= $17640

Average Common Stock shares = (Beginning Shares outstanding + Ending Shares outstanding) / 2

Beginning Shares outstanding = 279,167 - 4,900 = 274,267

Ending Shares outstanding = 278,277

Average = (274,267 + 278,277) / 2 = 276,272

Earning Per Share = ($278,600 - $17,640) / 276,272 = $0.94

Therefore Earning per share will be $0.94

3. Calculation for Return on Common Stockholders Equity

Using this formula

Return on Common Stockholder Equity =

(Net Income - Preference Dividend) / Avg Common Stockholder Equity

Average Common Stockholder Equity = (Beginning Stockholder Equity + Ending Stockholder Equity) / 2

Beginning Stockholder Equity will be:

Beginning common stock $837,500

Beginning Paid-in Capital in Excess of Stated Value on Common Stock $536,000

Beginning Retained Earnings $695,000

Treasury Stock ($39,200)

Beginning Stockholder Equity $2,029,300

Ending Stockholder Equity will be:

Ending common stock ($837,500 + [5,310*$3])

=$853,430

Ending Paid-in Capital in Excess of Stated Value on Common Stock ($536,000 + [5,310 * $4]) = $557,240

Ending Retained Earnings $761,166.10

Treasury Stock ($39,200 + [1300 * $9])

= ($50900)

Beginning Stockholder Equity$2,120,936.10

Calculation for Ending Retained Earnings

Using this formula

Ending Retained Earnings = Beginning Retained Earnings + Net Income - Dividend on common & Preferred stock

= $695, 000 + $278,600 - ($194,793.90 + $17,640)

= $761,166.10

Average Common Stockholder Equity = ($2,029,300 + $2,120,936.10) / 2 = $2,075,118.05

Return on Common Stockholder Equity = ($278,600 - $176,40) / $2,075,118.05

Return on Common Stockholder Equity = 12.6%

Therefore the Payout Ratio is 69.9%

Earning Per Share is $0.94

Return on Common Stockholder Equity is 12.6%