On January 1, 2010, Sienna Corporation purchased 2,000 shares of treasury stock. Other information regarding Siena Corporation is provided below.
|
2009 |
2010 |
|
|
Net income |
$110,000 |
$110,000 |
|
Dividends on preferred stock |
$10,000 |
$10,000 |
|
Dividends on common stock |
$2,000 |
$1,600 |
|
Weighted average number of shares outstanding |
10,000 |
8,000* |
|
Common stockholders’ equity, beginning of year |
$500,000 |
$400,000* |
|
Common stockholders’ equity, end of year |
$500,000 |
$400,000 |
Adjusted for purchase of treasury stock.
Compute (a) return on common stockholders’ equity for each year and (b) earnings per share for each year, and (c) discuss the changes in each.