Sehrt Corporation has provided the following financial data: Year 2 Year 1 Common stock, $3 par...
- Sehrt Corporation has provided the following financial data:
|
Year 2 |
Year 1 |
|||||||
|
Common stock, $3 par value |
$ |
300,000 |
$ |
300,000 |
||||
|
Total stockholders' equity |
$ |
803,000 |
$ |
770,000 |
||||
The company's net income for Year 2 was $44,000. Dividends on common stock during Year 2 totaled $11,000. The market price of common stock at the end of Year 2 was $6.29 per share.
Required:
a. What is the company's earnings per share for Year 2?
b. What is the company's price-earnings ratio for Year 2?
c. What is the company's dividend payout ratio for Year 2?
d. What is the company's dividend yield ratio for Year 2?
e. What is the company's book value per share at the end of Year 2?
Homework Answers
a)
Earnings per share = (Net Income - Preferred Dividends) / Number of outstanding shares
Number of outstanding shares = $300,000 / $3 per share
= 100,000 shares
Earnings per share = ($44,000 - $0) / 100,000 shares
= $44,000 / 100,000 shares
= $0.44 per share
b)
Price-earnings ratio = Market Price Per Share / Earnings Per Share
= $6.29 per share / $0.44 per share
= 14.30
c)
Dividend Payout Ratio = Dividends per share / Earnings Per Share
Dividends per share = $11,000 / 100,000 shares
= $0.11 per share
Dividend Payout Ratio = $0.11 per share / $0.44 per share
= 0.25
d)
Dividend Yield Ratio = Dividends per share / Market Price Per Share
= $0.11 per share / $6.29 per share
= 0.0175 or 1.75%
e) Book value per share = (Total Shareholders' Equity - Preferred Equity) / Total number of outstanding shares
= ($803,000 - $0) / 100,000 shares
= $803,000 / 100,000 shares
= $8.03 per share
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