During 2018, Baird Corporation reported after-tax net income of $3,620,000. Duri
ID: 2562485 • Letter: D
Question
During 2018, Baird Corporation reported after-tax net income of $3,620,000. During the year, the number of shares of stock outstanding remained constant at 9,920 of $100 par, 9 percent preferred stock and 396,000 shares of common stock. The company’s total stockholders’ equity is $19,600,000 at December 31, 2018. Baird Corporation’s common stock was selling at $52 per share at the end of its fiscal year. All dividends for the year have been paid, including $4.90 per share to common stockholders. Required 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 final 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).)
Explanation / Answer
Net income = 3,620,000
9% preferred stock = 9,920*100 = 992,000
Shares of common stock = 396,000
Total share holders equity = 19,600,000
Market price of common stock = 52
Dividends paid = 49
Earnings per share = (Net income - preferred dividends) / No of common shares outstanding
= [3,620,000 - (992,000*9%)] / 396,000
= (3,620,000 - 89,280) / 396,000 = 8.92
Book value per share of common stock = (Total share holders equity - preferred equity) / No of common shares outstanding
= (19,600,000 - 992,000) / 396,000 = 46.99
Price earnings ratio = Market price per share / earnings per share
= 52 / 8.92 = 5.83
Dividends yield = Dividends paid / Market price
= 4.9 / 52 = 9.42
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