Modern Building Supply sells various building materials to retail outlets. The company has just approached Linden State 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 follow:

Modern Building Supply: Balance sheet

	This Year	Last year
Assets
Current assets:
Cash	$63,000	$135,000
Market securities	0	19,000
Accounts receivable, net	471,000	289,000
Inventory	935,000	597,000
Prepaid expenses	17,000	24,000
Total current assets	1,486,000	1,064,000
Plant and equipment, net	1,539,810	1,445,550
Total assets	$3,025,810	$2,509,550
Liabilities and Stockholders' Equity
Liabitities:
Current liabilities	$812,000	$438,000
Bonds payable, 10%	617,000	617,000
Total liabilities	1,429,000	1,055,000
Stockholders' equity:
Pereferred stock, $25 par, 7%	255,000	255,000
Common stock, $10 par	507,000	507,000
Retained earnings	834,810	692,550
Total stockholders' equity	1,596,810	1,454,550
Total liabilities and stockholders equity	$3,025,810	$2,509,550

Comparative income statemet annd reconciliation

	This year	Last year
Sales	$5,007,000	$4,356,000
Cost of goods sold	3,866,000	3,443,000
Gross margin	1,414,000	913,000
Selling and administrative expenses	635,000	539,000
Net operating income	506,000	374,000
Interest expense	61,700	61,700
Net income before taxes	44,300	312,300
Income taxes (40%)	177,720	124,920
Net income	266,580	187,380
Dividends paid:
Preferred dividends	17,850	17,850
Common dividends	106,470	70,980
Total dividends paid	124,320	88,830
Net income retained	142,260	98,550
Retained earnings, beginning of year	692,550	594,000
Retained earnings, end of year	$834,810	$692,550

During the past year, the company has expanded the number of lines that it carries in order tostimulate sales and increase profits. It also moved aggressively to acquire new customers. Sales terms are 2/10, n/30. All sales are on account.

Assumer that the following ratios are typical of companines in the building supply industry:

Current ratio	2.5
Acid-test ratio	1.2
Average collection period	18 days
Average sale period	50 days
Debt-to-equity ratio	0.75
Times interest earned ratio	6.0
Return on total assets	10%
Price-earnings ratio	9

Assume that you have just inherited several hundred shares of Modern Building Supplu stock. Not being acquainted with the company, you decide to do some analytical work beofer making a decision about whether to retain or sell the stock you have inherited.

Required:

1. You decide first to assess the well-being of the common stockholders.For both this year and last year, compute the following:

a. The earnings per share (Round your answer to 2 decimal places.)

	This year	Last year
Earnings per share	$ ?	$ ?

b. The dividend yield ratio for common stock. The company's common stock is currently selling for $33.39 per share; last year it sold for $25.72 per share (Round you intermediate calculations to 2 decimal palces and final answers to 1 decimal place.)

	This year	Last year
Dividend yield ratio	? %	? %

c. The dividend payout ratio for common stock (Round you intermediate calculations to 2 decimal places and final answers to 1 decimal place.)

	This year	Last year
Dividend payout raito	? %	? %

d. The price-earnings ratio (Round your intermediate calculations to 2 decimal places and final answers to 1 decimal place.)

	This year	Last year
Price-earnings ratio	? times	? times

e. The book value per share of common stock (Round your ansers to 2 decimal places.)

	This year	Last year
Book value per share	$ ?	$ ?

2. You decide next to assess the compay's rate of return. Compute the following for bothe this year and last year:

a. The return on total assets (Total assets at the beginning of last year were $2,270,000) (Round your intermediate to whole numbers and final answer to 1 decimal place)

	This year	Last year
Return on total assets	? %	?%

b.The return on common stockholders' equity. (Stockholders' equity at the beginning of last year was $1,319,000) (Round you intermediate calculations to whole numbers and final answer to 1 decimal place.)

	This year	Last year
Return on common stockholders' equity	?%	?%