Answer:
1. We have:
Return on common stockholders' equity for the current year = 12.85%
Return on common stockholders' equity 1 year ago = 13.17%
2. We have:
Price Earnings Ratio for the current year = 12.72
Price Earnings Ratio 1 year ago = 14.53
2a. Simon has higher market expectations for future growth.
3. We have:
Dividend Yield for the current year = 1.10%
Dividend Yield 1 year ago = 0.59%
Explanation:
Note: This question is not complete. The complete question is therefore provided before answering the question. See the attached pdf file for the complete question.
The explanation of the answers is now provided as follows:
1. Compute return on common stockholders' equity for the current year and 1 year ago.
Note: See part 1 of the attached excel file for the computation of the return on common stockholders' equity for the current year and 1 year ago with the formulae.
To calculate Return on Common Stockholders’ Equity in the attached excel file, the following formula is used:
Return on Common Stockholders Equity = Net Income / (Average Common Stock + Retained Earnings)
From the attached excel file, we have:
Return on common stockholders' equity for the current year = 12.85%
Return on common stockholders' equity 1 year ago = 13.17%
2. Compute price-earnings ratio on December 31 for the current year and 1 year ago.
Note: See part 2 of the attached excel file for the computation of the price-earnings ratio on December 31 for the current year and 1 year ago with the formulae.
To calculate price-earnings ratio in the attached excel file, the following formula is used:
Price Earnings Ratio = Market Price / Earnings per share
From the attached excel file, we have:
Price Earnings Ratio for the current year = 12.72
Price Earnings Ratio 1 year ago = 14.53
2a. Assuming Simon's competitor has a price-earnings ratio of 8, which company has higher market expectations for future growth.
When the PE ratio is higher, it is an indication that investors are willing to pay a greater share price in the future because of expected growth.
Since Simon's PE ratios for the current year of 12.72 is greater than the competitor's 8, it indicates that Simon has higher market expectations for future growth.
3. Compute dividend yield for the current year and 1 year ago.
Note: See part 3 of the attached excel file for the computation of dividend yield for the current year and 1 year ago with the formulae.
To calculate Dividend Yield in the attached excel file, the following formula is used:
Dividend Yield = Dividend per share / Market Price per share
From the attached excel file, we have:
Dividend Yield for the current year = 1.10%
Dividend Yield 1 year ago = 0.59%
<span class="sg-text sg-text--link sg-text--bold sg-text--link-disabled sg-text--blue-dark">
xlsx
</span>
<span class="sg-text sg-text--link sg-text--bold sg-text--link-disabled sg-text--blue-dark">
pdf
</span>
