The financial statements for Castile Products, Inc., are given below: Account ba

Question

The financial statements for Castile Products, Inc., are given below:

Account balances at the beginning of the year were: accounts receivable, $200,000; and inventory, $340,000. All sales were on account.

Assume that Castile Products, Inc., paid dividends of $3.95 per share during the year. Also assume that the company’s common stock had a market price of $62 at the end of the year and there was no change in the number of outstanding shares of common stock during the year.

Earnings per share. (Round your answer to 2 decimal places.)

Dividend payout ratio. (Round your intermediate calculations to 2 decimal places. Round your final percentage answer to 1 decimal place (i.e., 0.1234 should be considered as 12.3%).)

Dividend yield ratio. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be considered as 12.3%).)

Price-earnings ratio. (Round your intermediate calculations to 2 decimal places and final answer to1 decimal place.)

Book value per share. (Round your answer to 2 decimal places.)

Castile Products, Inc.
Balance Sheet
December 31   Assets   Current assets:      Cash $ 24,000      Accounts receivable, net 250,000      Merchandise inventory 340,000      Prepaid expenses 8,000   Total current assets 622,000   Property and equipment, net 840,000   Total assets $ 1,462,000   Liabilities and Stockholders' Equity   Liabilities:      Current liabilities $ 210,000      Bonds payable, 10% 330,000   Total liabilities 540,000   Stockholders’ equity:      Common stock, $5 par value $ 140,000      Retained earnings 782,000   Total stockholders’ equity 922,000   Total liabilities and equity $ 1,462,000

Explanation / Answer

Solution: Part 1

Earning per share= net income /no. of common shares

= $284,900/ 28,000

= $10.18

Part 2

Dividend payout ratio = dividend per share / earning per share

= $3.95/ 10.18 = 38.8%

Part 3

Dividend yield ratio=dividend per share / market price

= 3.95/ 62 = 6.4%

Part 4

Price earning ratio= share market price / EPS

= 62 / 10.18= 6.1 Times

Part 5 Book value per share =

Stockholders's equity / no. Of common shares

=$922,000/ 28,000

= $32.93

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.