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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
CP 17-4 Profitability and stockholder ratios
Harley-Davidson, lnc., is a leading motorcycle manufacturer in the United States. The company manufactures and sells a number of different types of motorcycles, a complete line of motorcycle parts, and brand-related accessories, clothing, and collectibles. In recent years, Harley-Davidson has attempted to expand its dealer network and product lines internationally.
The following information is available for three recent years (in millions except pershare amounts):
 |
2008 |
2007 |
2006 |
Net income (loss) |
$655 |
$934 |
$1,043 |
Preferred dividends |
$0.00 |
$0.00 |
$0.00 |
Interest expense |
$4.50 |
$0.00 |
$0.00 |
Shares outstanding for |
 |  |  |
computing earnings per share |
233 |
238 |
258 |
Cash dividend per share |
$1.29 |
$1.06 |
$0.81 |
Average total assets |
$6,743 |
$5,595 |
$5,394 |
Average stockholders’ equity |
$2,246 |
$2,566 |
$2,921 |
Average stock price per share |
$31.29 |
$58.44 |
$60.98 |
1. Calculate the following ratios for each year:
a. Rate earned on total assets
b. Rate earned on stockholders’ equity
c. Earnings per share
d. Dividend yield
e. Price-earnings ratio
2. What is the ratio of average liabilities to average stockholders’ equity for 2008?
3. Explain the direction of the dividend yield and price-earnings ratio in light of Harley-Davidson’s profitability trend.
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