Question
Exercise 12-82 Stockholder Ratios Financial statements for Steele Inc. follow. Steele Inc. Consolidated Income Statements (in thousands except per share amounts) 2019 2018 2017 Net
Exercise 12-82 Stockholder Ratios
Financial statements for Steele Inc. follow.
Steele Inc. | |||||||
Consolidated Income Statements | |||||||
(in thousands except per share amounts) | |||||||
2019 | 2018 | 2017 | |||||
Net sales | $7,245,088 | $6,944,296 | $6,149,218 | ||||
Cost of goods sold | (5,286,253) | (4,953,556) | (4,355,675) | ||||
Gross margin | $1,958,835 | $1,990,740 | $1,793,543 | ||||
General and administrative expenses | (1,259,896) | (1,202,042) | (1,080,843) | ||||
Special and nonrecurring items | 2,617 | 0 | 0 | ||||
Operating income | $701,556 | $788,698 | $712,700 | ||||
Interest expense | (63,685) | (62,398) | (63,927) | ||||
Other income | 7,308 | 10,080 | 11,529 | ||||
Gain on sale of investments | 0 | 9,117 | 0 | ||||
Income before income taxes | $645,179 | $745,497 | $660,302 | ||||
Provision for income taxes | (254,000) | (290,000) | (257,000) | ||||
Net income | $391,179 | $455,497 | $403,302 |
Steele Inc. | |||||
Consolidated Balance Sheets | |||||
(in thousands) | |||||
ASSETS | Dec. 31, 2019 | Dec. 31, 2018 | |||
Current assets: | |||||
Cash and equivalents | $320,558 | $41,235 | |||
Accounts receivable | 1,056,911 | 837,377 | |||
Inventories | 733,700 | 803,707 | |||
Other | 109,456 | 101,811 | |||
Total current assets | $2,220,625 | $1,784,130 | |||
Property and equipment, net | 1,666,588 | 1,813,948 | |||
Other assets | 247,892 | 248,372 | |||
Total assets | $4,135,105 | $3,846,450 | |||
LIABILITIES AND STOCKHOLDERS EQUITY | |||||
Current liabilities: | |||||
Accounts payable | $250,363 | $309,092 | |||
Accrued expenses | 347,892 | 274,220 | |||
Other current liabilities | 15,700 | 0 | |||
Income taxes | 93,489 | 137,466 | |||
Total current liabilities | $707,444 | $720,778 | |||
Long-term debt | 650,000 | 541,639 | |||
Deferred income taxes | 275,101 | 274,844 | |||
Other long-term liabilities | 61,267 | 41,572 | |||
Total liabilities | 1,693,812 | 1,578,833 | |||
Stockholders equity: | |||||
Preferred stock | $100,000 | $100,000 | |||
Common stock | 89,727 | 89,727 | |||
Additional paid-in capitalcommon stock | 128,906 | 127,776 | |||
Retained earnings | 2,397,112 | 2,136,794 | |||
$2,715,745 | $2,454,297 | ||||
Less: Treasury stock, at cost | (274,452) | (186,680) | |||
Total stockholders equity | $2,441,293 | $2,267,617 | |||
Total liabilities and stockholders equity | $4,135,105 | $3,846,450 |
Use the information provided above and below to respond to the following requirements.
Year ended December 31, | ||
Item | 2019 | 2018 |
Average number of common shares outstanding (thousands) | 362,202 | 364,398 |
Preferred dividends (thousands) | $24,000 | $24,000 |
Dividends per common share | 0.36 | 1.54 |
Common dividends (thousands) | 130,861.00 | 561,172.30 |
Common stock repurchases | 0 | 0 |
Market price per share: | ||
High | 83.25 | 79.10 |
Low | 63.25 | 59.00 |
Close | 78.42 | 66.36 |
At January 1, 2018, total stockholders' equity was $2,083,122 and there was no preferred stock.
Required:
1. Compute the earnings per share, return on common equity, dividend yield ratio, and dividend payout ratio (in percentage terms, rounded to two decimal places except for EPS, which should be rounded to nearest cent) for 2018 and 2019.
2019 | 2018 | |||
Earnings per share | $ | $ | ||
Return on common equity | % | % | ||
Dividend yield ratio | % | % | ||
Dividend payout ratio | % | % |
2. Conceptual Connection: Indicate whether there were significant changes in these ratios between the years ended December 31, 2019, and December 31, 2018.
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