Question

Ch 17-3 Exercises and Problems eBook Show Me How Calculator Print Item 1. EX.17-01. ALGO 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: 2. EX.17-04. ALGO 3. EX.17-05 ALGO Common stock, $10 par value (no change during the year) $1,800,000 Preferred $5 stock, $100 par (no change during the year) 2,000,000 The net income was $676,000 and the declared dividends on the common stock were $45,000 for the current year. The market price of the common stock is $27.20 per share. 4. EX.17-06 ALGO 5. EX.17-19 ALGO 6. EX 17-20. ALGO 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 7. EX.17-21 ALGO 8. PR. 17-04.ALGO d. Dividend Yield Check My Work 2 more Check My Work uses remaining. Previous Next > Progress: 7/8 items

Answer 1

Average number of common shares outstanding = Common stock, par value/Par value per common share
= 1,800,000/10
= 180,000
Preferred stock dividend = Number of preferred shares outstanding x Dividend per preferred share
= 20,000 x 5
= 100,000
a)
Earnings per share = (Net income – Preferred stock dividend)/Average number of common shares outstanding
= (676,000 – 100,000)/180,000
= 576,000/180,000
= $3.2
b)
Price earnings ratio = Market price of 1 common share/Earnings per share
= 27.20/3.2
= 8.5
c)
Dividend per share = Cash dividend declared on common stock/Average number of common shares outstanding
= 45,000/180,000
= $0.25
d)
Dividend yield = Dividend per share/Market price per share
= 0.25/27.20
= 0.92%

a.	Earning per share	$ 3.2
b.	Price- Earnings ratio	8.5
c.	Dividends per share	$ 0.25
d.	Dividend Yield	0.92 %

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