Financial and Managerial Accounting: E17-12 Sanderson Company’s year-end balance sheets

Financial and Managerial Accounting
Exercise 17-12 Profitability analysis
Sanderson Company’s year-end balance sheets follow.
At December 31 2012 2011 2010
Assets
Cash 30,501 35,307 36,403
Accounts receivable, net 86,685 59,970 47,595
Merchandise inventory 105,753 77,645 51,708
Prepaid expenses 9,727 8,905 3,888
Plant assets, net 269,247 250,857 217,406
Total assets $501,913 $432,684 $357,000

Liabilities and Equity
Accounts payable 127,476 74,586 47,124
Long-term notes payable secured by
Mortgages on plant assets 94,360 98,522 79,686
Common stock, $10 par value 162,500 162,500 162,500
Retained earnings 117,577 97,076 67,690
Total liabilities and equity $501,913 $432,684 $357,000

The company’s income statements for the years ended December 31, 2012 and 2011, follow.
For Year Ended December 31 2012 2011
Sales 652,487 514,894
Cost of goods sold 398,017 334,681
Other operating expenses 202,271 130,268
Interest expense 11,092 11,843
Income taxes 8,482 7,723
Total costs and expenses 619,862 484,515
Net income $32,625 $30,379
Earnings per share $2.01 $1.87

Additional information about the company follows.
Common stock market price, December 31, 2012 30.00
Common stock market price, December 31, 2011 28.00
Annual cash dividends per share in 2012 0.32
Annual cash dividends per share in 2011 0.16

To help evaluate the company's profitability, compute the following ratios for 2012 and 2011:
(1) Return on common stockholders' equity. (Do not round intermediate calculations and round your final answers to 1 decimal place. Omit the "%" sign in your response.)
(2) Price-earnings ratio on December 31. (Round your answers to 1 decimal place.)
(3) Dividend yield. (Round your answers to 1 decimal place. Omit the "%" sign in your response.)
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