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Net income for the year was $1,330,000. Dividends were declared and paid on the preferred shares during the year, and a quarterly dividend of $0.35 per share was declared and paid each quarter on the common shares. The closing market price for the common shares on December 31, 2017, was $22.25 per share.

EPS, P/E Ratio, and Dividend Ratios The Stockholders' Equity section of the balance sheet for Balla Enterprises at the end of 2017 appears as follows: 8%, $100 par, cumulative preferred stock, 200,000 shares $5,000,000 authorized, 50,000 shares issued and outstanding Additional paid-in capital on preferred 2,500,000 Common stock, $5 par, 500,000 shares authorized, 400,000 shares issued and outstanding 2,000,000 Additional paid-in capital on common 18,000,000 Retained earnings 37,500,000 Total stockholders' equity $65,000,000 Net income for the year was $1,330,000. Dividends were declared and paid on the preferred shares during the year, and a quarterly dividend of $0.35 per share Required: 1. Compute the following ratios for the common stock: When required, round earnings per share and price/earnings ratio answers to two decimal places. For dividend payout and dividend yield ratios, round raw calcula a. Earnings per share 3.32 X b. Price/earnings ratio 6.7 X to 1 c. Dividend payout ratio 42.16 x % d. Dividend yield ratio 6.29 % 2. Before recommending the stock of Balla to a client, as a financial adviser, you would like to know: a. future earnings growth. b. risk of the stock. C. general economic trends and how they affect the company. d. all of these d

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