Solution-Calculate the payout ratio for both years

Calculate the payout ratio for both years

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Reference no: EM132072928

Question - Cepeda Company manufactures backpacks. During 2014, Cepeda issued bonds at 10% interest and used the cash proceeds to purchase treasury stock. The following financial information is available for Cepeda Company for the years 2014 and 2013.

	2014	2013
Sales revenue	$26,685,000	$26,685,000
Net income	6,641,600	7,412,500
Interest expense	739,500	207,060
Tax expense	1,986,550	2,223,750
Dividends paid on common stock	1,316,310	1,517,454
Dividends paid on preferred stock	443,700	443,700
Total assets (year-end)	42,992,500	50,034,375
Average total assets	23,201,813	26,271,477
Total liabilities (year-end)	8,874,000	4,437,000
Avg. total common stockholders' equity	13,902,600	20,853,900

(a) Use the information above to calculate the following ratios for both years:

(i) Return on assets

(ii) Return on common stockholders' equity

(iii) Payout ratio

(iv) Debt to assets ratio

(v) Times interest earned

Reference no: EM132072928

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Calculate the payout ratio for both years

Reference no: EM132072928

Reference no: EM132072928

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