Question

The financial statements for Castile Products, Inc., are given below Castile Products, Inc. Balance Sheet December 31 Assets Current assets: Cash $ 21,000 260,000 360,000 8,000 Accounts receivable, net Merchandise inventory Prepaid expenses Total current assets 649,000 820,000 Property and equipment, net Total assets $1,469,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities $300,000 350,000 Bonds payable, 11% Total liabilities Stockholders' equity: Common stock, $5 par value Retained earnings 650,000 $110,000 709,000 Total stockholders' equity 819,000 Total liabilities and equity $1,469,000 Castile Products, Inc. Income Statement For the Year Ended December 31 $2,290,000 1,240,000 Sales Cost of goods sold Gross margin Selling and administrative expenses 1,050,000 570,000 480,000 Net operating income Interest expense 38,500 Net income before taxes Income taxes (30% 441,500 132,450 $ 309,050 Net income Account balances at the beginning of the year were: accounts receivable, $200,000; and inventory $280,000. All sales were on account Assume that Castile Products, Inc., paid dividends of $2.25 per share during the year. Also assume that the company's common stock had a market price of $60 at the end of the year and there was no change in the number of outstanding shares of common stock during the year. Required: Compute financial ratios as follows

Answer 1

Ans:

Earning Per Share	= Net Income/No of Shares
	=309,050/(110000/5)
	14.05
Dividend Payout Ratio	= Divined Per share/ Earning Per Share
	=2.25/14.05
	16.01%
Dividend Yield Ratio	= Dividend Per Share/ Market Value Per Share
	=2.25/60
	=3.8%
Price Earning Ratio	= Market Price Per Share/ Earning Per share
	=60/14.05
	4.27
Book Value Per Share	= Total Shareholder's Equity/ No of Shares
	=819000/(110000/5)
	37.23/-