# Ferman corporation had net income of 140000 and paid

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Chapter 6 / Exercise 41
Applied Calculus for the Managerial, Life, and Social Sciences
Tan
Expert Verified
193.Ferman Corporation had net income of \$140,000 and paid dividends of \$40,000 tocommon stockholders and \$20,000 to preferred stockholders in 2017. FermanCorporation’s common stockholders’ equity at the beginning and end of 2017 was\$870,000 and \$1,130,000, respectively. Ferman Corporation’s return on commonstockholders’ equity wasa.14%.b.12%.c.9%.d.8%.Ans: B, LO: 4, Bloom: AP, Difficulty: Hard, Min: 4, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC:Problem Solving, IMA: Business EconomicsSolution: (\$140,000 \$20,000) [(\$870,000 + \$1,130,000) 2] 12%(Net inc. Pref. div.) [(beg. st. eq. + end. st. eq) 2]194.Ferman Corporation had net income of \$140,000 and paid dividends of \$40,000 tocommon stockholders and \$20,000 to preferred stockholders in 2017. FermanCorporation’s common stockholders’ equity at the beginning and end of 2017 was\$870,000 and \$1,130,000, respectively. Ferman Corporation’s payout ratio for 2017 wasa.4.0%.b.42.9%.c.28.6%.d.14.3%.Ans: C, LO: 4, Bloom: AP, Difficulty: Hard, Min: 4, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC:Problem Solving, IMA: Business EconomicsSolution: \$40,000 \$140,000 28.6%(Com. div. Net inc.)195.Herman Corporation had net income of \$100,000 and paid dividends of \$25,000 tocommon stockholders and \$20,000 to preferred stockholders in 2017. HermanCorporation’s common stockholders’ equity at the beginning and end of 2017s was\$450,000 and \$550,000, respectively. Herman Corporation’s return on commonstockholders’ equity isa.20.0%.b.16.0%.c.15.0%.d.11.0%.Ans: B, LO: 4, Bloom: AP, Difficulty: Hard, Min: 4, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC:Problem Solving, IMA: Business Economics
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Chapter 6 / Exercise 41
Applied Calculus for the Managerial, Life, and Social Sciences
Tan
Expert Verified
Solution: (\$100,000 \$20,000) [(\$450,000 + \$550,000) 2] 16.0%(Net inc. Pref. div.) [(beg. st. eq. + end. st. eq) 2]196.Herman Corporation had net income of \$100,000 and paid dividends of \$25,000 tocommon stockholders and \$20,000 to preferred stockholders in 2017. HermanCorporation’s common stockholders’ equity at the beginning and end of 2017 was\$450,000 and \$550,000, respectively. Herman Corporation’s payout ratio for 2017 isa.45%.b.25%.c.20%.d.5%.Ans: B, LO: 4, Bloom: AP, Difficulty: Hard, Min: 4, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC:Problem Solving, IMA: Business EconomicsSolution: \$25,000 \$100,000 25%(Com. div. Net inc.)197.From the information below, compute the payout ratio for Kevin’s Trailers.Net Income\$250Cash Dividends (common)40Retained Earnings 500Stock Dividends (common)10a.20%.b.16%.c.8%.d.4%.Ans: B, LO: 4, Bloom: AP, Difficulty: Medium, Min: 2, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC:Problem Solving, IMA: Business EconomicsSolution: \$40 \$250 16%(Com. div. Net inc.)