Question

OCloud Corporation’s suite of software products and services provides secure and scalable solutions for global companies. The following is an extract from the company’s 2020 and 2019 comparative income statements and statement of financial position. The market price of OCloud’s common shares was $41.14 and $37.90 on June 30, 2020, and June 30, 2019, respectively. OCloud declared dividends per common share of $0.477 and $0.419 for 2020 and 2019, respectively. OCLOUD CORPORATION Years Ended June 30, 2020, and 2019 (in thousands) Comparative Income Statement 2020 2019 Total revenues $2,311,022 $1,810,219 Total cost of revenues 760,464 576,489 Total operating expenses 1,165,383 876,024 Net income $1,058,338 $272,922 Statement of Financial Position 2020 2019 Total assets $7,413,594 $5,117,770 Total liabilities 3,941,729 3,786,515 Common share capital 1,444,298 823,831 Total shareholders’ equity $3,471,865 $1,331,255 Weighted average number of commons shares outstanding 253,943 241,004

Calculate the return on shareholders’ equity for OCloud in 2020. Note that OCloud’s articles of incorporation authorize only common shares. The average return for the shares listed on the Toronto Stock Exchange in a comparable period was 19.8%. (Round answer to 1 decimal place, e.g. 15.2%.) Return on shareholder’s equity %

Calculate earnings per share for the years 2020 and 2019. (Round answers to 2 decimal places, e.g. 15.27.) 2020 2019 Earnings per share $ per share $ per share

Calculate the dividend payout ratio and the dividend yield for 2020 and 2019. (Round answers to 1 decimal place, e.g. 15.2%.) 2020 2019 Dividend payout ratio % % Dividend yield % %

Answer 1

Ansswer to Q a)

Return on Shareholders Equity 2020 : Net income/shareholders equity

                                                  = $1,058,338/3,471,865 ; 30.4%

Earning per share for 2020 & 2019 ; Net income/Weighted average Outstanding shares

                            2020 = $1,058,338/253,943 ; 4.16

                            2019 = $272,922/241,004; 1.13

Dividend Payout ratio : Dividends paid/Net income

                         2020 = 253,943*$0.477/$1,058,338 ; 11.4%

                        2019 = 241,004*$0.419/$272,922; 36.9%

Dividend Yield ; Annual Dividend/Share price

                 2020 =      $0.477/$41.14 ; 1.2%

                 2019 =       $0.419/$37.90 ; 1.1%