Markus Company’s common stock sold for $3.50 per share at the end of this year.

Question

Markus Company’s common stock sold for $3.50 per share at the end of this year. The company paid a common stock dividend of $0.63 per share this year. It also provided the following data excerpts from this year’s financial statements:

What is the earnings per share?

What is the dividend payout ratio and the dividend yield ratio?

What is the accounts receivable turnover and the average collection period?

What is the inventory turnover and the average sale period?

Markus Company’s common stock sold for $3.50 per share at the end of this year. The company paid a common stock dividend of $0.63 per share this year. It also provided the following data excerpts from this year’s financial statements:

Explanation / Answer

Answer 1:

Earning per share = Net Income available for distribution / No. of shares outstanding
No. of shares outstanding = 133,000 / 1 = 133,000 Shares
Earning per share = $106,400 / 133,000
Earning per share = $0.80

Answer 2:

Price-earnings ratio = Price per share / Earning per share
Price-earnings ratio = $3.50 / $0.80
Price–earnings ratio = 4.38 times

Answer 3:

Dividend payout ratio = Dividend per share / Earning per share
Dividend payout ratio = $0.63 / $0.80
Dividend payout ratio = 78.75%

Dividend yield ratio = Dividend / price per share
Dividend yield ratio = $0.63 / $3.50
Dividend yield ratio = 0.18 or 18%

Answer 4:

Average total assets = (Beginning total assets + Ending total assets) / 2
Average total assets = ($586,800 + $557,000) / 2
Average total assets = $571,900

Return on total assets = Net Income / Average total assets
Return on total assets = $106,400 / $571,900
Return on total assets = 18.60%

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