For 2008, Orchard Corporation reported after-tax net income of $5,800,000. Durin

Question

For 2008, Orchard Corporation reported after-tax net income of $5,800,000. During the year, the number of shares of stock outstanding remained constant at 10,000 of $100 par, 9 percent preferred stock and 400,000 shares of common stock. The company’s total stockholders’ equity was $23,000,000 at December 31, 2008. Orchard Corporation’s common stock was selling at $52 per share at the end of its fiscal year. All dividends for the year had been paid, including $4.80 per share to common stockholders.

Required:
Compute the following:
a.Earnings per share
b.Book value per share of common stock
c.Price-earnings ratio
d.Dividend yield
(Round your answers to 2 decimal places. Omit the "$" and "%" sign in your response.)
a. Earnings Per Share = $
b. Book Value Per Share of common stock = $
c. Price-Earnings Ratio = times earnings
d. Dividend Yield = %

Explanation / Answer

a. EPS=(NI-Pref. Div.)/common shares outstanding=(5,800,000-10,000*$100*0.09)/400,000=5,710,000/400,000=$14.28/sh b.Book value per sh=(Total Stockholder's Equity-Liquidating pref div-Reg. Pref div-Div in arreas-Participating div)/ weighted average sh outstanding= =(23,000,000-0-10,000*$100*0.09-0-0)/400,000=(23,000,000-90,000)/400,000=22,910,000/400,000=$57.28/sh c.$52/$14.28=3.64 d. div to common 400,000*$4.80=$1,920,000 div to preferred 10,000*$100*.09=$90,000 1,920,000/5,800,000=33.10% 90,000/5,800,000=1.55%

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