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 880,000 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 $22.00. 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 880,000 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 $22.00. All of the company’s sales are on account.

Explanation / Answer

1) Earning per share = Net Income / weighted average common shares = 4710000 / 880000                                      = 5.35        2) Price earning ratio = Market price per share / earning per share                                       = 22 / 5.35                                         = 4.11 3) Dividend payout ratio = Total dividend / Net income = 352 / 4710 = 0.0747 = 7.47% 4) Dividend yeild ratio = Cash dividend per share / maret value per share                                           =0.40 / 22                                           = 0.1818                                           = 18.18% 5) Book value per share = total common stockholders equity / number of common shares = 37298/880                                             = 42.38

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