During 2014, Desny Corporation reported after-tax net income of $3,585,000. Duri
ID: 2494630 • Letter: D
Question
During 2014, Desny Corporation reported after-tax net income of $3,585,000. During the year, the number of shares of stock outstanding remained constant at 9,720 of $100 par, 10 percent preferred stock and 398,000 shares of common stock. The company’s total stockholders’ equity is $19,800,000 at December 31, 2014. Desny Corporation’s common stock was selling at $54 per share at the end of its fiscal year. All dividends for the year have been paid, including $4.80 per share to common stockholders.
Compute the earnings per share. (Round your answer to 2 decimal places.)
Compute the book value per share of common stock. (Round your answer to 2 decimal places.)
Compute the price-earnings ratio. (Round intermediate calculations and answer to 2 decimal places.)
Compute the dividend yield. (Round your answer to 2 decimal places. (i.e., .2345 should be entered as 23.45).)
Required
Explanation / Answer
book value per share = (total stockholders equity - prefered stock)/ total no. of shares outstanding
company’s total stockholders’ equity is $19,800,000
10% preference share capital= 9720*100=972000$
no of eqity shares outstanding=398,000 shares
preference dividend=972000$*10/100=97200$
net income= $3,585,000
EPS= $3,585,000-97200$=3487800$/398000=8.76$
Book Value= $19,800,000-972000$/398000=47.31$
P/E ratio= EPS/ market price per share=8.76/54=16.22%
dividend yield=annual dividends per share/ price per share= 4.8/54*100=8.88%
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