Hartly Inc. is a manufacturer of custom motorcycle and automotive parts. The company is publicly traded with its common shares trading at $8.75/share.
In 2020, the company earned a net income of $975,250 and had an average shareholders' equity of $3,457,000. During 2020, the company had shareholders' equity consisting of 575,000 common shares and 125,000, $1 non-voting, cumulative preferred shares. There were no common shares sold or repurchased in 2020 and preferred shareholders received a dividend payment.
Instructions
Calculate and comment on the following ratios for Hartly for 2020:
a) Earnings per share
b) Price/earnings ratio
c) Return on shareholders' equity

Question

Quizplus · Accepted Answer

The Answer of Hartly Inc. is a manufacturer of custom motorcycle and automotive parts. The company is publicly traded with its common shares trading at $8.75/share.
In 2020, the company earned a net income of $975,250 and had an average shareholders' equity of $3,457,000. During 2020, the company had shareholders' equity consisting of 575,000 common shares and 125,000, $1 non-voting, cumulative preferred shares. There were no common shares sold or repurchased in 2020 and preferred shareholders received a dividend payment.
Instructions
Calculate and comment on the following ratios for Hartly for 2020:
a) Earnings per share
b) Price/earnings ratio
c) Return on shareholders' equity