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Question(s) / Instruction(s):

Sanderson Company’s year-end balance sheets follow.

 At December 31                                             2012                                      2011                                      2010

Assets:                                                                                                                                 

Cash                                                                     $26,505                $31,621                $33,957 

Accounts receivable, net                              78,404                                 57,572                                  45,276 

Merchandise inventory                                 96,586                                 73,862                                  49,680 

Prepaid expenses                                           8,888                                    8,300                                    3,698 

Plant assets, net                                              252,749                 227,897                                210,389 

Total assets                                                       $463,132                             $399,252                             $343,000

 

Liabilities and Equity

Accounts payable                                           $116,473                             $67,474                $46,182 

Long-term notes payable secured by

Mortgages on plant assets                           89,681                                 90,910                                  78,077 

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

Retained earnings                                          94,478                                  78,368                                  56,241

 Total liabilities and equity                        $463,132                             $399,252                             $343,000       

 

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

     

 For Year Ended December 31                    2012                                                                                                       2011

  Sales                                                                   $602,072                                                                             $475,110 

Cost of goods sold                                           $367,264                                                                             $308,822

 Other operating expenses                          186,642                                                                120,203

Interest expense                                            10,235                                                                                  10,928

Income taxes                                                    7,827                                                                                    7,127

Total costs and expenses                             571,968                                                                                447,080

Net income                                                       $30,104                                                                $28,030

Earnings per share                                           $1.85                                                                                   $1.72

 

Additional information about the company follows.

Common stock market price, December 31, 2012              $31.00 

Common stock market price, December 31, 2011              29.00 

Annual cash dividends per share in 2012                                                0.30 

Annual cash dividends per share in 2011                                                0.15 

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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