The financial statements for Castile Products, Inc., are given below: Castile Pr

Question

The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet Assets Current assets: 5 20,000 230,000 380,000 11,000 Merchandise inventory Prepaid expenses Total current assets Property and equipment, net 841,000 840,000 Total assets $1,481,000 Liabilities and Stockholders' Equity Liabilities Current liabilities Bonds payable, 116 5 230,000 400,000 30,000 5 160,000 Total liabilities Stockholders' equity: Common stock, $10 par value Retained earnings 891,000 851,000 $1,481,000 Total stockholders' equity Total liabilities and equity

Explanation / Answer

1. Earning per share = Net income / Number of common stock

= 277200 / 16000    [ Number of common stock = 160000 / 10 = 16000 ]

   = 17.325 i.e., 17.33 (approx)

2. Dividen pay out ratio = Total dividend / Net income * 100

   = 60000(NOTE 1) / 277200 * 100

   = 21.65 % (approx)

   (NOTE 1) = Total dividend = 16000 * 3.75

   = $ 60000

3. Dividend yield ratio = Dividend per share / Market price per share * 100

     = 3.75 / 66(NOTE 2) * 100

   = 5.68 %

  (NOTE 2):- The figure of market price per share in the question is not clearly visible. whether it is 66 or 88. I am assuming the figure as 66.

4. Price- earning ratio = Market price per share/ Earning per share

= 66 / 17.33

= 3.81 (approx)

5. Book value per share = Total stock holder equity / Number of common stock

   = 851000 / 16000

   = 53.1875 i.e., $ 53.19 (approx)

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