Problem 1 (Profitability Ratios)

The following data are from the financial statements of Parada, Inc.:

December 31, 2019 January 1, 2019

Total Assets 180,000 140,000

Total Equity 144,000 112,000

Total Preference Equity 30,000 30,000

Preference Dividends Declares 2,400 -

Profit 20,000 -

Interest Expense 5,750 -

Calculate the following ratios:

1. Return on total assets
2. Return on ordinary equity

Please provide a solution.

Problem 2 (Profitability Ratios)

Gonzales is analyzing the earnings performance of the Bobadilla Transport Corporation. He has gathered the following data from Bobadilla's financial statements and form a report of the closing market prices of shares:

Profit for 2019 743,000

Preference dividends declared during 2019 60,000

Ordinary dividends declared December 31, 2019 620,000

Number of Bobadilla ordinary shares outstanding:

January 1, 2019 1,100,000 shs.

December 31, 2019 1,300,000 shs.

Market price per ordinary share on December 31, 2019 P15

Calculate the following ratios relating to the Bobadilla share:

1. Basic earnings per ordinary share
2. Price-earnings ratio
3. Dividend yield on ordinary share