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 910,000 shares of common stock were outstanding. The interest rate on the bonds, which were sold at their face value, was 12%. The income tax rate was 40% and the dividend per share of common stock was $0.40 this year. The market value of the company’s common stock at the end of the year was $24. 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.

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 910,000 shares of common stock were outstanding. The interest rate on the bonds, which were sold at their face value, was 12%. The income tax rate was 40% and the dividend per share of common stock was $0.40 this year. The market value of the company’s common stock at the end of the year was $24. All of the company’s sales are on account.

Explanation / Answer

1. Earnings per share = Net income / no. of common stock
= $5,430,000 / 910,000 = $5.97 per share

2. Price-earnings ratio = MPS / EPS = $24 / $5.97 = 4.02 times

3. Dividend payout ratio = Dividend per share / Earnings per share
= $0.40 / $5.97 = 6.70%

4. Dividend yield ratio = DPS/MPS = $0.40 /$24 = 1.67%

5. Book value per share = Shareholders equity / Total outstanding shares
= $38,486,000 / 910,000  = $42.29 per share

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