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Parsons Co

Parsons Co. reported financial information including preference shares outstanding, ordinary shares issued and outstanding, dividends paid, market price, retained earnings, treasury shares, and net income. This information can be used to calculate: 1) The total equity in the statement of financial position which includes share capital from preference and ordinary shares, share premium, and retained earnings. 2) Earnings per share based on net income and ordinary shares outstanding. 3) Book value per ordinary share calculated from total equity divided by ordinary shares. 4) The payout ratio found from dividends paid over earnings. 5) Return on ordinary share equity from net income divided by ordinary share equity.

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209 views1 page

Parsons Co

Parsons Co. reported financial information including preference shares outstanding, ordinary shares issued and outstanding, dividends paid, market price, retained earnings, treasury shares, and net income. This information can be used to calculate: 1) The total equity in the statement of financial position which includes share capital from preference and ordinary shares, share premium, and retained earnings. 2) Earnings per share based on net income and ordinary shares outstanding. 3) Book value per ordinary share calculated from total equity divided by ordinary shares. 4) The payout ratio found from dividends paid over earnings. 5) Return on ordinary share equity from net income divided by ordinary share equity.

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Franz Apple
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Ex. 15-159—Computation of selected financial ratios. The following information pertains to Parsons Co.

:
Preference shares, cumulative: Par per share $100 Dividend rate 8% Shares outstanding 5,000 Dividends
in arrears none Ordinary shares: Par per share $10 Shares issued 60,000 Dividends paid per share $2.70
Market price per share $48.00 Share premium—ordinary $200,000 Unappropriated retained earnings
(after closing) $135,000 Retained earnings appropriated for contingencies $150,000 Ordinary treasury
shares: Number of shares 5,000 Total cost $125,000 Net income $370,000 Instructions Compute
(assume no changes in balances during the past year): (a) Total amount of equity in the statement of
financial position (b) Earnings per share (c) Book value per ordinary share (d) Payout ratio (e) Return on
ordinary share equity *Ex. 15-160—Dividends on preference shares. The equity section of Lemay
Corporation shows the following on December 31, 2011: Share capital—preference—6%, $100 par,
4,000 shares outstanding $ 400,000 Share capital—ordinary—$10 par, 60,000 shares outstanding
600,000 Share premium—ordinary 200,000 Retained earnings 114,000 Total equity $1,314,000
Instructions Assuming that all of the company's retained earnings are to be paid out in dividends on
12/31/11 and that preference dividends were last paid on 12/31/09, show how much the preference
and ordinary shareholders should receive if the preference share are cumulative and fully participating.

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