The income statement for Sutherland, Inc., appears below. SUTHERLAND, INC. Incom

Question

The income statement for Sutherland, Inc., appears below.

SUTHERLAND, INC.
Income Statement
For the Year Ended December 31, 2017

Additional information:

Compute the following ratios for 2017. (Round Earnings per share to 2 decimal places, e.g. 1.75, and all other answers to 1 decimal place, e.g. 6.8 or 6.8% .)

SUTHERLAND, INC.
Income Statement
For the Year Ended December 31, 2017

Net sales $400,000 Cost of goods sold 230,000 Gross profit 170,000 Expenses (including $16,000 interest and $24,000 income taxes) 105,000 Net income $ 65,000

Explanation / Answer

EPS= Earnings/ No.of shares

=$65000/30000= $ 2.167 per share

Price Earning Ratio= Price per share/ EPS

$13/$2.167= 5.99 times ~ 6 times

Dividend per share (DPS)= $26000/30000= $0.86 per share

Payout Ratio= DPS/ EPS= 0.86/2.167= 39.69%

Time Interest Earned = Earning before Intt & Taxes/ Interest= $105000/$16000

= 6.56 times

Note:Earning before Intt & Taxes= $65000+$4000

=$105000

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