Five Measures of Solvency or Profitability
The balance sheet for Garcon Inc. at the end of the current fiscal year indicated the following:
Bonds payable, 6% | $1,000,000 |
Preferred $10 stock, $50 par | 43,000 |
Common stock, $10 par | 795,500.00 |
Income before income tax was $198,000, and income taxes were $30,300 for the current year. Cash dividends paid on common stock during the current year totaled $21,479. The common stock was selling for $18 per share at the end of the year.
Determine each of the following. Round answers to one decimal place, except for dollar amounts which should be rounded to the nearest whole cent. Use the rounded answers for subsequent requirements, if required.
a. Times interest earned ratio | times | |
b. Earnings per share on common stock | $ | |
c. Price-earnings ratio | ||
d. Dividends per share of common stock | $ | |
e. Dividend yield |
% |
Earnings per Share, Price-Earnings Ratio, Dividend Yield
The following information was taken from the financial statements of Tolbert Inc. for December 31 of the current fiscal year:
Common stock, $25 par value (no change during the year) | $3,750,000 |
Preferred $8 stock, $100 par (no change during the year) | 2,000,000 |
The net income was $520,000 and the declared dividends on the common stock were $37,500 for the current year. The market price of the common stock is $16.80 per share.
For the common stock, determine (a) the earnings per share, (b) the price-earnings ratio, (c) the dividends per share, and (d) the dividend yield. If required, round your answers to two decimal places.
a. Earnings per Share | $ | |
b. Price-Earnings Ratio | ||
c. Dividends per Share | $ | |
d. Dividend Yield | % |
Particulars | Garcon Inc | Tolbert Inc |
Earnings before tax (EBT) | 198000 | |
Add: Interest expense (on bonds 1mil * 6%) | 60000 | |
Earnings before Interest and tax (EBIT) | 258000 | |
Times interest earned ratio (EBIT / interest expense) | 4.3 | |
Earnings before tax (EBT) | 198000 | |
Tax expense | 30300 | |
Earnings after tax or Net income | 167700 | 520000 |
Less: Preferred Dividend | 0 | 0 |
Earnings available to common stockholders | 167700 | 520000 |
Number of common shares | 79550 | 150000 |
Therefore, Earnings per share (EPS) (Earnings Available / Number of shares) | 2.11 | 3.47 |
Market Price per share (MPS) | 18 | 16.8 |
EPS (as above) | 2.11 | 3.47 |
Price Earning Ratio (MPS / EPS) | 8.5 | 4.85 |
Total Dividend issued | 21479 | 37500 |
Number of common shares | 79550 | 150000 |
Therefore, Dividend per share (DPS) (Dividend Isssued / Number of shares) | 0.27 | 0.25 |
DPS (as above) | 0.27 | 0.25 |
MPS | 18 | 16.8 |
Dividend Yield Ratio (DPS / MPS) | 1.5% | 1.49% |
Five Measures of Solvency or Profitability The balance sheet for Garcon Inc. at the end of...
Five Measures of Solvency or Profitability The balance sheet for Garcon Inc. at the end of the current fiscal year indicated the following: Bonds payable, 7% $1,000,000 Preferred $10 stock, $50 par 52,500 Common stock, $7 par 117,600.00 Income before income tax was $210,000, and income taxes were $31,500 for the current year. Cash dividends paid on common stock during the current year totaled $50,400. The common stock was selling for $120 per share at the end of the year....
Five Measures of Solvency or Profitability The balance sheet for Garcon Inc. at the end of the current fiscal year indicated the following: Bonds payable, 8% $1,000,000 Preferred $5 stock, $50 par 146,000 Common stock, $11 par 192,720.00 Income before income tax was $224,000, and income taxes were $34,200 for the current year. Cash dividends paid on common stock during the current year totaled $43,800. The common stock was selling for $100 per share at the end of the year....
Five Measures of Solvency or Profitability The balance sheet for Garcon Inc. at the end of the current fiscal year indicated the following: Bonds payable, 6% $1,300,000 Preferred $10 stock, $50 par 75,000 Common stock, 58 par 435,000.00 Income before income tax was $273,000, and income taxes were $40,500 for the current year. Cash dividends paid on common stock during the current year totaled $32,625. The common stock was selling for $40 per share at the end of the year....
Five Measures of Solvency or Profitability The balance sheet for Garcon Inc. at the end of the current fiscal year indicated the following: Bonds payable, 8% $900,000 Preferred $5 stock, $100 par $228,000 Common stock, $8 par $319,200.00 Income before income tax was $201,600, and income taxes were $30,600 for the current year. Cash dividends paid on common stock during the current year totaled $33,516. The common stock was selling for $28 per share at the end of the year....
Five Measures of Solvency or Profitability The balance sheet for Garcon Inc. at the end of the current fiscal year indicated the following: Bonds payable, 6% $1,900,000 Preferred $10 stock, $50 par 73,500 Common stock, $12 par 308,700.00 Income before income tax was $319,200, and income taxes were $47,250 for the current year. Cash dividends paid on common stock during the current year totaled $54,023. The common stock was selling for $70 per share at the end of the year....
Five Measures of Solvency or Profitability The balance sheet for Garcon Inc. at the end of the current fiscal year indicated the following: Bonds payable, 9% $1,300,000 Preferred $5 stock, $50 par 162,000 Common stock, $11 par 133,650.00 Income before income tax was $304,200, and income taxes were $45,000 for the current year. Cash dividends paid on common stock during the current year totaled $54,675. The common stock was selling for $180 per share at the end of the year....
Five Measures of Solvency or Profitability The balance sheet for Garcon Inc. at the end of the current fiscal year indicated the following Bonds payable, 10% Preferred $5 stock, $50 par Common stock, $6 par Income before income tax was $390,000, and income taxes were $57,950 for the current year. Cash dividends paid on common stock during the current year totaled S55,647. The common stock was selling for $18 per share at the end of the year Determine each of...
17-21 Five Measures of Solvency or Profitability The balance sheet for Garcon Inc. at the end of the current fiscal year indicated the following: Bonds payable, 10% $1,700,000 Preferred $10 stock, $100 par 196,000 Common stock, $11 par 689,920.00 Income before income tax was $391,000, and income taxes were $57,800 for the current year. Cash dividends paid on common stock during the current year totaled $125,440. The common stock was selling for $50 per share at the end of the...
Five Measures of Solvency or Profitability The belance sheet for Garcon Inc. at the end of the currert fiscal year indicated the fallowing Bonds payable, 9% $1,B00,000 Preferred $10 stock, $S0 par 183,500 Common stock, $7 par 1,605,625.00 Incpme before income tax was $583.200, and income taxes were $87,750 for the current year. Cash dividends paid on common stock during the current year totaled $103,219. The common stock was selling for 18 per share at the end of the year....
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