Comparative financial statements for Weller Corporation, a merchandising company

Question

Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December 31 appear below The company did not issue any new common stock during the year. A total of 890,000 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 this year was $22.50. All of the company's sales are on account.

Explanation / Answer

Earning per share: Net income available for common Stockholder/ Average Number of shares $ 4800,000/890,000 share = $ 5.39 per share Price Earning ratio: market price per share/ Earning per share $ 22.50 /5.39 = 4.174 times Dividend payout ratio: Dividend per share/ Earnings per share *100 $ 0.40 /5.39 *100 = 7.42% Dividend Yield ratio: Dividend per share/ Market price per share *100 0.40 /22.50 *100= 1.78% Book Value per share: Total Stockholder's equity / Number of shares $ 37,544,000 /890,000 = $ 42.18 per share

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