For 2008, orchard corp reported after-tax net income of $5800000. During the yea

Question

For 2008, orchard corp reported after-tax net income of $5800000. During the year, the number of shares of stock outstanding remained constant at 10,000 at $100 par, 9% preferred stock and 400000 shares of common stock. The company's totals tockholders' equity was $23000000 at December 31, 2008. Orchard corps common stock was selling at %52 per share at teh end of its fiscal year. All dividends for the year had been paid, including $4.80 per share to common stockholders.
Compute the following:
a. earnings per share
b. book value per share of common stock
c. price-earnings ratio
d. dividend yield

Explanation / Answer

a.EPS = NI/No. of common stock shares

EPS = $5,800,000/400,000 = $14.5

b.Book value per share of common stock = (Total Shareholder Equity - Prefered Stock)/No. of common stock shares

book value per share of common stock = ($23,000,000 - $1,000,000)/400,000 = $55

c. price-earnings ratio = M.P per share/EPS

    price-earnings ratio = $52/$14.5 = 3.59

d. Dividend yield = Dividend Per Share/Market price per share

    Dividend Yield = $4.80/$52 = 9.23%

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