The income statement for Christensen, Inc., appears below. CHRISTENSEN, INC. Inc
ID: 2349522 • Letter: T
Question
The income statement for Christensen, Inc., appears below.CHRISTENSEN, INC.
Income Statement
For the Year Ended December 31, 2011
Sales $398,700
Cost of goods sold 232,900
Gross profit 165,800
Expenses (including $16,000 interest and $23,340 income taxes) 109,700
Net income $56,100
Additional information:
The weighted average common shares outstanding in 2011 were 29,000 shares.
The market price of Christensen, Inc. stock was $11 in 2011.
Cash dividends of $25,000 were paid, $4,550 of which were to preferred stockholders.
Compute the following ratios for 2011.
(a) Earnings per share. (Round answer to 2 decimal places, e.g. 10.50 and use the rounded the amount for future calculations.)
(b) Price-earnings. (Round answer to 1 decimal place, e.g. 10.5.)
(c) Payout. (Round answer to 0 decimal places, e.g. 25%.)
(d) Times interest earned. (Round answer to 1 decimal place, e.g. 10.5.)
(a) Earnings per share $
(b) Price-earnings times
(c) Payout %
(d) Times interest earned times
Explanation / Answer
earning per share = 25000-4550 / 29000 = 0.705 Price-earnings times = 11/1.778= 6.187 pay out = 25000/56000 = 44.6% times interest earned = EBIT/ interest EBIT = 165800- (109700)+16000+23340 = $95540 times interest earned = 95540/16000 = 5.965
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.