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Calculate the rate of return on common shareholders equity

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Question - Novak Inc. had net income for 2021 of $2,180,000. The company had 770,000 of common shares outstanding throughout the year. During 2021, Novak paid $0.05 dividends per common shares. The average common shareholder equity was $8,778,000, and the market value of the shares on December 31, 2020 was $8 per share.

Novak Inc. also had 290,000 shares outstanding of cumulative, $3, no-par value preferred shares. The shares were outstanding for the full year, and dividends had been paid in all previous years.

Required - Calculate the following ratios for Novak Inc., and round answers to 2 decimal places:

1. Rate of return on common shareholders' equity

2. Payout ratio

3. Price earnings ratio

4. Book value per share

Reference no: EM132706072

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