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, $330,000. All sales were on account.

Assume that Castile Products, Inc., paid dividends of $2.85 per share during the year. Also assume that the company’s common stock had a market price of $59 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.)

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

Explanation / Answer

SOLUTION:

1). Earnings per share= Earning attributable to equity shareholders / Number of equity shares outstanding during the year

= 223,580 / 24000

= $9.32

(number of shares= 120000/5 = 24000 )

2). Dividend payout ratio = Dividend per share / earning per share

= 2.85/9.32

= 30.6%

3). Dividend yield ratio = Annual dividends per share / Price per share

= 2.85 / 59

= 4.8%

4). Price-earnings ratio = Market value per share / Earning per share

= 59 / 9.32

= 6.33

5). Book value per share = Total shareholder equity - Preferred equity / Total outstanding shares

= 805000 - 0 / 24000

= $33.54

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