a. Compute or determine the following or the years 07-11 1. degree of financial

Question

a. Compute or determine the following or the years 07-11 1. degree of financial leverage 2. earnings per common share 3. price/earnings rtio 4.Percentae of ernings retained 5. Dividend payout 6. Dividend yield 7. Book value per share 8. Materiality of options (use stock options outstanding) Donna Szabo Corporation: Balance sheet 12-31-07 through 12-31-11 ($ in thousands) 2011 2010 2009 2008 2007 Assets current assets cash 26000 27000 29000 28000 27000 accounts receivable, net 125000 126000 128000 130000 128000 inventory 140000 143000 145000 146000 144000 Total current assets 291,000 296,000 302,000 304,000 299,000 Property, plant, & equipment net 420000 418000 417000 418000 415000 Total Assets 711000 714000 719000 722000 714000 Liabilities and stockholders Equity current liabilities: accounts payable 120000 122000 122500 124000 125000 income tax 12000 13000 12500 13000 12000 total curren liabilities 132000 135000 136000 137000 137000 long term debt 90000 65000 67000 68000 69000 Stockholders equity: Perfered stock 49000 76000 80000 82000 75000 common stock 290000 290000 290000 290000 290000 paid-in capital in excess of par, common stock 70000 70000 70000 70000 70000 retained earnings 80000 78000 76000 75000 73000 total stokholders equity 489000 514000 616000 517000 508000 total liabilities and stockholders equity 711000 714000 719000 722000 714000 Yeard Ended 12-31-07 though 11 Statement of Earnings Net sales 890000 870000 850000 935000 920000 cost of goods sold -540000 -530700 -522750 -579000 -570000 gross profit 350000 339300 327250 356000 350000 selling and adminstrative expense -230000 -225000 -220000 -225000 -224000 interest expense -9500 -6600 -6800 -6900 -7000 earnings from continuing operations before taxes 110500 107700 100450 124100 119000 income tax -33000 -33300 -32100 -30400 -37400 earning from continuing operations 77500 74400 68350 93700 81600 extraordinary gain, net of taxes 20000 0 0 0 0 net earnings 97500 74400 68350 93700 81600 earnings per share; continuing operations 2.67. 2.57. 2.36. 3.23. 2.81. extraordinary gain 0.69 0 0 0 0 Net earnings per share 3.36 2.57 2.36 3.23 2.81 Note: Additional data: 1. Preferred stock dividends (in thousands): 2011 $3,920 2010 $6,100 2009 $6,400 2008 $6,600 2007 $6,000 2. Common shares outstanding, 29,000,000 (actual) (2007%u20132011) 3. Stock options outstanding, 1,000,000 (actual) (2007%u20132011) 4. Dividends per common share (actual): 2011 $3.16 2010 $2.29 2009 $2.10 2008 $2.93 2007 $2.80 5. Market price per common share (actual): 2011 $24.00 2010 $22.00 2009 $21.00 2008 $37.00 2007 $29.00 a. Compute or determine the following or the years 07-11 1. degree of financial leverage 2. earnings per common share 3. price/earnings rtio 4.Percentae of ernings retained 5. Dividend payout 6. Dividend yield 7. Book value per share 8. Materiality of options (use stock options outstanding) Donna Szabo Corporation: Balance sheet 12-31-07 through 12-31-11 ($ in thousands) 2011 2010 2009 2008 2007 Assets current assets cash 26000 27000 29000 28000 27000 accounts receivable, net 125000 126000 128000 130000 128000 inventory 140000 143000 145000 146000 144000 Total current assets 291,000 296,000 302,000 304,000 299,000 Property, plant, & equipment net 420000 418000 417000 418000 415000 Total Assets 711000 714000 719000 722000 714000 Liabilities and stockholders Equity current liabilities: accounts payable 120000 122000 122500 124000 125000 income tax 12000 13000 12500 13000 12000 total curren liabilities 132000 135000 136000 137000 137000 long term debt 90000 65000 67000 68000 69000 Stockholders equity: Perfered stock 49000 76000 80000 82000 75000 common stock 290000 290000 290000 290000 290000 paid-in capital in excess of par, common stock 70000 70000 70000 70000 70000 retained earnings 80000 78000 76000 75000 73000 total stokholders equity 489000 514000 616000 517000 508000 total liabilities and stockholders equity 711000 714000 719000 722000 714000 Yeard Ended 12-31-07 though 11 Statement of Earnings Net sales 890000 870000 850000 935000 920000 cost of goods sold -540000 -530700 -522750 -579000 -570000 gross profit 350000 339300 327250 356000 350000 selling and adminstrative expense -230000 -225000 -220000 -225000 -224000 interest expense -9500 -6600 -6800 -6900 -7000 earnings from continuing operations before taxes 110500 107700 100450 124100 119000 income tax -33000 -33300 -32100 -30400 -37400 earning from continuing operations 77500 74400 68350 93700 81600 extraordinary gain, net of taxes 20000 0 0 0 0 net earnings 97500 74400 68350 93700 81600 earnings per share; continuing operations 2.67. 2.57. 2.36. 3.23. 2.81. extraordinary gain 0.69 0 0 0 0 Net earnings per share 3.36 2.57 2.36 3.23 2.81 Note: Additional data: 1. Preferred stock dividends (in thousands): 2011 $3,920 2010 $6,100 2009 $6,400 2008 $6,600 2007 $6,000 2. Common shares outstanding, 29,000,000 (actual) (2007%u20132011) 3. Stock options outstanding, 1,000,000 (actual) (2007%u20132011) 4. Dividends per common share (actual): 2011 $3.16 2010 $2.29 2009 $2.10 2008 $2.93 2007 $2.80 5. Market price per common share (actual): 2011 $24.00 2010 $22.00 2009 $21.00 2008 $37.00 2007 $29.00

Explanation / Answer

year 11 year 10 year 9 year 8 year 7 PBIT = gross profit - expense 580000 564300 547250 581000 574000 PBT = operation before taxes 110500 107700 100450 124100 119000 1.) DFL = PBIT / PBT 5.248869 5.239554 5.447984 4.681708 4.823529 2.) Earning per share = net profit / no. of outstanding shares 3.36 2.57 2.36 3.23 2.81 3) P/E ratio = MPS / EPS 7.142857 8.560311 8.898305 11.45511 10.32028 4) %age of retained earnings = retained earning * 100/ net earning 82.05128 104.8387 111.1924 80.04269 89.46078 5) Dividend payout ratio = DPS / EPS 0.940476 0.891051 0.889831 0.907121 0.996441 6) Divident yield = DPS / MPS 0.131667 0.104091 0.1 0.079189 0.096552 7) Book value per share = property plant and equip / ( preff stock + common stock) 1.238938 1.142077 1.127027 1.123656 1.136986 8) Materiality of options = preferred stock dividend / outstanding shares 3.92 6.1 6.4 6.6 6

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