Question

1.

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, $10 par value (no change $1,400,000 during the year) Preferred $10 stock, $200 par (no change 4.000.000 during the year) The net income was $452,000 and the declared dividends on the common stock were $35,000 for the current year. The market price of the common stock is $14.40 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 L %

2.

Answer 1

Solution to the QUESTION-1

(a)-Earnings per share

Preferred Dividend = $200,000 [($4,000,000 / $200) x $10]

Number of common shares outstanding = 140,000 shares [$1,400,000 / $10 per share]

Earnings per share = (Net Income – Preferred Dividend) / Number of common shares outstanding

= [$452,000 - $200,000] / 140,000 Shares

= $252,000 / 140,000 Shares

= $1.80 per share

(b)-Price-earnings ratio

Price-earnings ratio = Market Price per share / Earnings per share

= $14.40 per share / $1.80 per share

= 8.00 Times

(c)-Dividends per share

Dividends per share = Common Dividend Paid / Number of common shares outstanding

= $35,000 / 140,000 Shares

= $0.25 per share

(e)-Dividend yield

Dividend yield = (Dividend per share / Market price per share) x 100

= ($0.25 / $14.40) x 100

= 1.74%

PLEASE BE NOTED (More than 1 Question)