You are given the following information for Smashville, Inc. During the year, Sm

Question

You are given the following information for Smashville, Inc.

  

    

     

During the year, Smashville, Inc., had 17,000 shares of stock outstanding and depreciation expense of $15,000. Calculate the book value per share, earnings per share, and cash flow per share. (Do not round intermediate calculations. Round your answers to 2 decimal places. Omit the "$" sign in your response.)

  

  Cost of goods sold: $ 234,000   Investment income: $ 2,600   Net sales: $ 397,000   Operating expense: $ 92,000   Interest expense: $ 7,400   Dividends: $ 12,000   Tax rate: 40 %

Explanation / Answer

1. Net assets = 21,000 + 42,000 + 131,000 + 46,000 + 47,000 - 20,000 - 22,000 - 5,000 = $240,000
Book value per share = Net assets / no. shares outstanding = 240,000 / 17,000 = $14.12 per share

2. Earnings after tax(EAT) = (397,000 - 234,000 - 7,400) * (1 - 0.4) = $93,360
Earnings per share = EAT / no. shares outstanding = 93,360 / 17,000 = $5.49 per share

3. Cash flow per share = (EAT + Depreciation) / no. shares outstanding = (93,360 + 15,000) / 17,000 = $6.37 per share

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