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 850,000 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 of the year was $20.50. 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 850,000 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 of the year was $20.50. All of the company’s sales are on account.

Explanation / Answer

1) Earnings per share.

    =   Total earning available for equity shareholders

          Number of outstanding equity shares

For Previous Year:-                                                                  For Current Year:-

= $ 4740/850 = $5.576                                                                   = $ 4440/850 = $5.224

2) Price-earnings ratio -:

     = Market price per share                                        

          Earning price per share

For Previous Year:-                                                                  For Current Year:-

= 20.50/5.576 = $ 3.676                                                               = 20.50/5.224 = $ 3.924

3) Dividend payout ratio.-

         = Total dividend paid * 100

             Net Income

For Previous Year:-                                                                     For Current Year:-

= ( 340/4740)*100 =7.17%                                                              = ( 340/4440 )*100 =7.66%  

4) Dividend yield ratio-

         = Cash dividend per share

Market value per share

For Previous Year:-                                                                         For Current Year:-    

= $340/20.50 = $16.585                                                                       = $340/20.50 = $16.585

5) Book value per share.-

     Net assets                                   OR    Stake holders Equity                    

     Number of share stock outstanding                              Number of share stock outstanding  

For Previous Year:-                                                                 For Current Year:-  

= $ 32460 / 850 = $ 38.188                                                       = $ 36560 / 850 = $ 43.011

( using seconf formula)

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