Question

Question:

Use the following financial information for Samsung (Samsung.com)

Net income less dividends available to preferred shares (in millions) W 16,317,275

Cash dividends declared for common stock (in millions) . . . . . . . .. . W 2,677,250

Cash dividends declared per common share . . . . . . . . . . . . . . . . . . . W 21,015

Number of common shares outstanding (in millions). . . . . . . . . . . . . . . . . . . 127.397

Weighted-average common shares outstanding (in millions) . . . . . . . . . . 129.190

Equity applicable to common shares (in millions) . . . . .. . . . . . 178,940,338

Required

1. Compute book value per share for Samsung.

2. Compute earnings per share (EPS) for Samsung.

3. Compare Samsung’s dividends per share with its EPS. Is Samsung paying out a large or small amount of its income as dividends? Explain

Short answer

Answer

1. Book value per share is W1,404,588.
2. Earnings per share is W126,304
3. Percentage of dividend declared is 16.64%

Step-by-step solution

Book value per share for Samsung (1):

(In Millions)

	Amount
Total stockholders’ equity (A)	W178,940,338
Equity applicable to common shares (B)	127.397
Book value per common share C=A/B	W1,404,588

Requirement 2: Earnings per share (EPS) for Samsung (2)

(In Millions)

	Amount
Net income less dividends available to preferred shares (A)	W 16,317,275
Weighted-average common shares outstanding (B)	129.190
Earnings per common share C=A/B	W126,304

Requirement 3: Compare Dividend per share with EPS (3)

$$\begin{gathered} \mathit{P}\mathit{e}\mathit{r}\mathit{c}\mathit{e}\mathit{n}\mathit{t}\mathit{a}\mathit{g}\mathit{e}\mathit{o}\mathit{f}\mathit{D}\mathit{i}\mathit{v}\mathit{i}\mathit{d}\mathit{e}\mathit{n}\mathit{d}\mathit{D}\mathit{e}\mathit{c}\mathit{l}\mathit{a}\mathit{r}\mathit{e}\mathit{d}\mathbf{=}\frac{\mathbf{D}\mathbf{i}\mathbf{v}\mathbf{i}\mathbf{d}\mathbf{e}\mathbf{n}\mathbf{d}}{\mathbf{E}\mathbf{a}\mathbf{r}\mathbf{n}\mathbf{i}\mathbf{n}\mathbf{g}\mathbf{s}\mathbf{P}\mathbf{e}\mathbf{r}\mathbf{S}\mathbf{h}\mathbf{a}\mathbf{r}\mathbf{e}} \\ \mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{=}\frac{\mathbf{21}\mathbf{,}\mathbf{015}}{\mathbf{126}\mathbf{,}\mathbf{304}} \\ \mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{=}\mathbf{16}\mathbf{.}\mathbf{64}\mathbf{\%} \end{gathered}$$

As the dividend declared is less than 25% then its small dividend.