Earnings per Share, Price-Earnings Ratio, Dividend Yield The following informati

Question

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, $35 par value (no change during the year) Preferred $4 stock, $100 par (no change during the year) The net income was $420,000 and the declared dividends on the common stock were $62,500 for the current year. The market price of the common stock is $10.20 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 $8,750,000 3,000,000 Price-Earnings Ratio c. Dividends per Share d. Dividend Yield

Explanation / Answer

working :

earning s per share for commonstock = (net income - preferred dividend) / number of common shares.

here,

net income = $420,000

preferred dividend = $4 * ($3,000,000/ $100) =>$120,000.

number of commonshares = $8,750,000 / $35 par value

=>$8,750,000 / 35=>250,000 share

eps = ($420,000 - 120,000) / 250,000

=>$1.20 per share.

b. price earning ratio = price per share / earning per share

=>$10.20 / 1.20

=>8.5 times.

c.dividends per share =$62,500 / 250,000 shares

=>$0.25

d.dividend yield = dividend per share / price per share

=>$0.25 / $10.20 *100

=>2.45%

a earning per share $1.20 b price earnings ratio 8.5 times c dividends per share $0.25 d.dividend yield 2.45%

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