Selected financial information about Backpacking Resources, Inc., is as follows:

Question

Selected financial information about Backpacking Resources, Inc., is as follows:

Using the company's financial information, compute the following:

A) Dividend yield. Round the answer to two decimal places. ________%

B) Book value per share. Round your answer to the nearest cent.
$_________per share

C) Earnings per share. Round your answer to the nearest cent.
$__________per share

D) P/E ratio. Round the answer to two decimal places.
__________times

Total assets $20,000,000 Total liabilities $8,000,000 Total preferred stock $3,000,000 Total annual preferred stock dividends $210,000 Net profits after tax $1,000,000 Number of shares of common stock outstanding 400,000 shares Current market price of common stock $57.00 a share Annual common stock dividends $2.28 a share

Explanation / Answer

A) Dividend yield

Dividend yield = Annual Dividend per share / Price per share

= 2.28 / 57

= .04

= 4%

B) Book value per share

Book Value per Share = (Shareholders' Equity - Preferred Equity) / Total Outstanding Common Shares

Shareholders' Equity = Total assets - Total liabilities

= 20,000,000 - 8,000,000

= 12,000,000

Book Value per Share = (12,000,000 - 3,000,000)/400,000

= 9,000,000/400,000

= 22.50

C) Earnings per share.

EPS = Earnings available to common stock holders / Number of shares of common stock outstanding

D) P/E ratio

PE Ratio = Market price per share / Earnings per share.

= 57/1.98

= 28.79

PAT       1,000,000 Less: Preferred Dividend           210,000 Earnings available to common stock holders           790,000 Shares Outstanding           400,000 EPS                  1.98

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