Modern Building Supply sells various building materials to retail outlets. The company has just approached Linden Bank requesting a $300,000 loan to strengthen the cash account and to pay certain pressing short-term obligations. The company's financial statements for the most recent two years are shown below. MODERN BUILDING SUPPLY Comparative Balance Sheet This Year Last Year Assets Current assets: Cash 98, 803 283, 083 Temporary investments 58, 083 Accounts receivable, net 658, 883 48 8, 083 Inventory BOB " BOE 'T gea, Bea Prepaid expenses 28,883 Total current assets 2, 868,808 1,478,808 Plant and equipment, not 1,948, 808 Total assets $ 4, 808, 808 $ 3,380, 808 Liabilities and Shareholders' Equity Liabilities: Current liabilities $ 1, 108, 803 $ Bonds payable, 12% 758, 808 758, 883 Total liabilities 1, 858, 803 1,358,883 Shareholders' equity: Preferred shares, 4,808, $4 no par 280, 083 Common shares, 50, 808 508, 883 Retained earnings 1, 458, 808 1,258,808 Total shareholders' equity 2, 158, 808 1,958,808 Total liabilities and shareholders' equity $ 3,308,808 MODERN BUILDING SUPPLY Comparative Income Statement and Reconciliation of Retained Earnings This Year Last Year Sales $7, 808, 808 $6, 080, Bae Cost of goods sold 5, 480, 808 4,880, 838 Gross margin 1, 608, 808 1, 280, 838 Selling and administrative expenses 718, 838 Operating income 638, 808 490,838 Interest expense 38 3' 86 Net income before taxes 548, 808 480, 838 Income taxes (48X) 216, 808 168, 838 Net income 248, BBB Dividends paid: Preferred dividends 16, 838 Common dividends 188, 808 68, 838 Total dividends paid 124, BOB 76, 808 Net income retained 208, 808 Retained earnings, beginning of year 1, 258, 808 1,086, 838 Retained earnings, end of year $1, 450, 808 $1, 250, 830 During the past year, the company has expanded the number of lines that it carries in order to stimulate sales and increase profits. It has also moved aggressively to acquire new customers. Sales terms are 2/10, n/80. All sales are on account. Assume that you have just inherited several hundred shares of Modern Building Supply. Not being acquainted with the company, you decide to do some analytical work before making a decision about whether to retain or sell the shores you have inherited. Required: 1. You decide first to assess how well the company is doing from the perspective of the common shareholders. For both this year and last year, compute the following: a. The earnings per share. (Round your answers to 2 decimal places.) This Year Last Year Earnings per share S 29.16b. The dividend yield ratio for common shares. The company's common shares are currently selling for $45 per shore: last year they sold for $36 per share. (Do not round Intermediate calculations and round your final answers to 2 decimal places.) This Year Last Year Dividend yield ratio % % c. The dividend payout ratio for common shares. (Do not round Intermediate calculations and round your final answers to 1 decimal place.) Thle Year Last Year Dividend payout ratio % d-1. The price-earnings ratio. (Do not round Intermediate calculations and round your final answers to 1 decimal place.) This Year Last Year Price-earnings ratio d-2. This part of the question is not part of your Connect assignment. e-1. The book value per common share. This Year Last Year The book value per common share e-2. This part of the question is not part of your Connect assignment 2. You decide to assess the company's rate of return next a. Compute the return on total assets for both this year and last year. (Total assets at the beginning of last year were $2,700,000.) (Round your answers to 1 decimal place.) This Year Last Year Relum on total assets b. Compute the return on common shareholders' equity for both this year and last year. (Shareholders' equity at the beginning of last year was $1,786,000.) (Round your answers to 1 decimal place.) This Year Last Year Return on common shareholders' equity |% %