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Question(s) / Instruction(s):

                                Sanderson Company’s year-end balance sheets follow.

      

 At December 31                                             2012                      2011                       2010

 Assets                                                                                                                                  

 Cash                                                                    $28,709 $34,575                $34,264 

 Accounts receivable, net                             83,208                  58,727                  44,763 

 Merchandise inventory                                                104,618                79,955                 48,650 

 Prepaid expenses                                           9,339                    8,631                    3,730 

 Plant assets, net                                             265,635   241,827               218,193

 Total assets                                                      $491,509              $423,715             $349,600

 

 Liabilities and Equity:                                                                                                                    

 Accounts payable                                          $118,714              $73,040                $45,224 

 Long-term notes payable secured by

Mortgages on plant assets                           90,556                  98,429                  78,807 

 Common stock, $10 par value                    162,500                  162,500               162,500 

 Retained earnings                                         119,739 89,746                  63,069

 Total liabilities and equity                        $491,509              $423,715             $349,600 

                                               

      

The company’s income statements for the years ended December 31, 2012 and 2011, follow.

 For Year Ended December 31

                                                                                2012                                                                                       2011

Sales                                                                     $638,962                                                                             $504,221

Cost of goods sold                                           $389,767                                                                              $327,744 Other operating expenses                                198,078                                                                127,568 Interest expense                                           10,862                                                                                   11,597                   Income taxes                                                   8,307                                                                                     7,563                     Total costs and expenses                            607,014                                                                                474,472 

Net income                                                       $31,948                                                                $29,749 

Earnings per share                                           $1.97                                                                                   $1.83 

 

Additional information about the company follows.

 Common stock market price, December 31, 2012             $32.00 

 Common stock market price, December 31, 2011             30.00 

 Annual cash dividends per share in 2012                               0.22 

 Annual cash dividends per share in 2011                               0.11 

 

Required:

To help evaluate the company\'s profitability, compute the following ratios for 2012 and 2011:

(1)          Return on common stockholders\' equity.

(2)          Price-earnings ratio on December 31.

(3)          Dividend yield.

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