Comparative financial statements for Weller Corporation, a merchandising company

Question

Comparative financial statements for Weller Corporation, a merchandising company, for the fiscal year ending December 31 appear below. The company did not issue any new common stock during the year. A total of 950,000 shares of common stock were outstanding. The interest rate on the bond payable was 12%, the income tax rate was 40%, and the dividend per share of common stock was $0.40. The market value of the company’s common stock at the end of the year was $25.50. All of the company’s sales are on account.

Earnings per share. (Round your answer to 2 decimal places.)

Price-earnings ratio. (Round your intermediate calculations and final answer to 2 decimal places.)

Dividend payout ratio. (Round your intermediate calculations and final answer to 2 decimal places.)

Dividend yield ratio. (Round your intermediate calculations and final answer to 2 decimal places.)

Book value per share. (Round your answer to 2 decimal places.)

Comparative financial statements for Weller Corporation, a merchandising company, for the fiscal year ending December 31 appear below. The company did not issue any new common stock during the year. A total of 950,000 shares of common stock were outstanding. The interest rate on the bond payable was 12%, the income tax rate was 40%, and the dividend per share of common stock was $0.40. The market value of the company’s common stock at the end of the year was $25.50. All of the company’s sales are on account.

Explanation / Answer

1) earning per share = Net income / Common shares outstanding                  = 6240000 / 950000                 = 6.57 2) Price earning ratio = Market vakue per share / earning per share Price earning ratio = 25.5 / 6.57                    = 3.88 3) Dividend payout ratio = Total Dividends / Net Income                          = 380000 / 6240000*100                          = 6.09% 4) Dividend yeild ratio = Cash dividend per share / market value per share                       = 0.40 / 25.5 *100                       = 1.57% 5) Book value per share = Owners equity / Number of shares                         = 39920000/950000                         = 42.02

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