Eanings per Share, Price-Earnings Ratio, Dividend Yield The following informatio

Question

Eanings per Share, Price-Earnings Ratio, Dividend Yield The following information was taken from the financial statements of Tolbert Inc. for December 31 of the current fiscal year: Common stock, $35 par value (no change during the year) Preferred $10 stock, $200 par (no change during the year) The net income was $1,210,000 and the declared dividends on the common stock were $67,500 for the current year. The market price of the common stock is $24.00 per share. For the common stock, determine (a) the earnings per share, (b) the price-earnings ratio, (c) the dividends per share, and (d) the dividend yield. If required, round your answers to two decimal places. a. Earnings per Share b. Price-Earnings Ratio G Dividends per Share d. Dividend Yield $9,450,000 8,000,000

Explanation / Answer

Net income available $ 12,10,000

Less : Dividend Declared $ 67,500

Net income available to common stock holders $ 11,42,500

(a) EPS = Net income available to common stock holders / No of common stock

= $ 11,42,500/270000

EPS = 4.23/Share

(b) Price Earning Ratio = Market Price/EPS

= $24/$4.23

MPS = 5.67 Times

(c) Dividend per share = Dividend declared / no of common shares

= $67500/ 270000 shares

= $ 0.25/share

(d) Dividend Yield = Dividend per share / Market price per share

= 0.25 / 24 * 100 = 1.04 %

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