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Cullumber Company has $1,110,000 in assets and $1,110,000 in stockholders’ equity, with 40,500 shares outstanding the...

Cullumber Company has $1,110,000 in assets and $1,110,000 in stockholders’ equity, with 40,500 shares outstanding the entire year. It has a return on assets of 10%. During 2021, it had net income of $111,000. On January 1, 2022, it issued $440,000 in debt at 6% and immediately repurchased 20,250 shares for $440,000. Management expected that, had it not issued the debt, it would have had net income of $111,000 in 2022. Assume the company pays dividends on common stock equal to its net income each year. Also, assume the accrued interest on the debt was paid at December 31, 2022 and the company has no other debt outstanding at year-end.

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Determine the company’s net income and earnings per share for 2021 and 2022. (Ignore taxes in your computations.) (Round earnings per share to 2 decimal places, e.g. $2.66.)

2021

2022

Net income

 $enter net income in dollars $enter net income in dollars

Earnings per share

 $enter earnings per share in dollars rounded to 2 decimal places $enter earnings per share in dollars rounded to 2 decimal places

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Compute the company’s return on common stockholders’ equity for 2021 and 2022. (Round answers to 2 decimal places, e.g. 15.25%)

2021

2022

Return on common stockholders’ equity

 enter return on common stockholders’ equity ratio in percentages rounded to 0 decimal places % enter return on common stockholders’ equity ratio in percentages rounded to 0 decimal places %

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Partially correct answer iconYour answer is partially correct.

Compute the company’s debt to assets ratio for 2021 and 2022. (Round answers to 2 decimal places, e.g. 15.25%)

2021

2022

Debt to assets ratio

enter debt to assets ratio in percentages rounded to 0 decimal places

 %

enter debt to assets ratio in percentages rounded to 0 decimal places

 %

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ekkarill92 answered 1 year ago
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