Solution-Discuss the advantage of the common stockholders

Discuss the advantage of the common stockholders

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Reference no: EM131774563

Paul Pigeon is a day trader. He is interested in the common stock of Captain Computers Limited. The following data are available for the company:

	2014	2015	2016
Dividends paid per share*	$4	$3	$2.50
Dividend yield ratio	5.5%	5.5%	5.5%
Dividend payout ratio	40%	40%	40%
Return on total assets	10%	12%	8%
Return on common stockholders' equity	8%	14.5%	9%

*There were no changes in common stock outstanding over the three-year period.

Required: Paul would like answers to the following questions:

Is the market price of the company's stock going up or down?
Is the company employing financial leverage to the advantage of the common stockholders?

Reference no: EM131774563

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Discuss the advantage of the common stockholders

Reference no: EM131774563

Reference no: EM131774563

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