The financial statements for Castile Products, Inc., are given below: Account ba
ID: 2404497 • Letter: T
Question
The financial statements for Castile Products, Inc., are given below:
Account balances at the beginning of the year were: accounts receivable, $190,000; and inventory, $260,000. All sales were on account.
Assume that Castile Products, Inc., paid dividends of $4.05 per share during the year. Also assume that the company’s common stock had a market price of $63 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 to 1 decimal place.)
Book value per share. (Round your answer to 2 decimal places.)
Balance Sheet
December 31 Assets Current assets: Cash $ 18,000 Accounts receivable, net 190,000 Merchandise inventory 310,000 Prepaid expenses 8,000 Total current assets 526,000 Property and equipment, net 890,000 Total assets $ 1,416,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities $ 240,000 Bonds payable, 10% 330,000 Total liabilities 570,000 Stockholders’ equity: Common stock, $5 par value $ 130,000 Retained earnings 716,000 Total stockholders’ equity 846,000 Total liabilities and equity $ 1,416,000
Explanation / Answer
1.Earning Per Share= Total Earning Available to common stock holders/No of shares of common stock
No of Equity shares=130000/5=26000
EPS = Net Income/No of Equity Shares
=270900/26000
=$10.41 Per share.
2. Dividend payout ratio.
= Dividends per share /Earning per share
=4.05/10.41=38.90%
3.Dividend Yield Ratio.
=Annual Dividends Per share/Market Price per Share
=4.05/63
=6.42%
4.Price earning ratio.
=Market Value per Share / Earnings per Share
=63/10.41=6.05
5.Book value per share
=Shareholders' Equity - Preferred Shares /Total Number of Outstanding Shares
Shareholders Equity=common stock value + Retained Earnings=130000+716000=716000
Total Number of shares outstanding= Common stock-treasury stock=130000/5=26000
Therefore
716000/26000=$27.53
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