Earnings per share. (Round your answer to 2 decimal places.) Price-earnings rati

Question

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.)

1.

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

2.

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

3.

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

4.

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

5.

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

Comparative financial statements for Weller Corporation, a merchandising company, for the fiscal ending December 31 appear below. The company did not issue any new common stock during th year. A total of 900,000 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 $0.75 last year and $0.40 this year. The market value of the company's common stock at the end year was $23.00. All of the company's sales are on account. Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets Cash Accounts receivable, net Inventory Prepaid expenses $ 240 $ 510 15,400 10,250 8,600 1,900 2,300 10,200 Total current assets 27,740 21,660 Property and equipment: Land 7,000 7,000 Buildings and equipment, net Total property and equipment Total assets Liabilities and Stockholders' Equity 20,200 20,000 27,200 27,000 $54,940 $48,660 Current liabilities Accounts payable Accrued liabilities $10,500 $ 8,800 800 ,200 400 Notes payable, short term 400 Total current liabilities Long-term liabilities 11,700 10,400 5,000 16,700 15,400 Bonds payable 5,000 Total liabilities Stockholders' equity: Common stock Additional paid-in capital 900 4,700 900 4,700 Total paid-in capital Retained earnings 5,600 5,600 32,640 27,660 38,240 33,260 $54,940 $48,660 Total stockholders'equity Total liabilities and stockholders' equity Weller Corporation Comparative Income Statement and Reconciliation (dollars in thousands)

Explanation / Answer

1. Earnings per share is $5.93 per share calculated as under:

Particulars

Amount ($)

Net income- Preferred stock dividends (a)

$5,340

Average common stock outstanding (b)

900

Earnings per share (a)/(b)

5.93

2.

Price-earnings ratio:

Price earnings ratio measures the ratio of market price of each share of common stock to the earning per share.

This ratio is used to show the relationship between market price of share and earning per share.

Market price was $23 in this year and Earning per share is $5.33 per share.

So PE ratio is $23/$5.33 = $4.32 per share

3.

Dividend Payout ratio is the cash dividend declared on common stock divided by the net income.

Dividend paid is the difference between opening retained earning plus net income minus closing retained earning

360/5340 = 0.07 or 6.74%

Particulars

Amount ($)

Net income- Preferred stock dividends (a)

$5,340

Average common stock outstanding (b)

900

Earnings per share (a)/(b)

5.93

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