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 $12,000,000 Total preferred stock $2,500,000 Total annual preferred stock dividends $225,000 Net profits after tax $500,000 Number of shares of common stock outstanding 300,000 shares Current market price of common stock $57.00 a share Annual common stock dividends $1.71 a share

Explanation / Answer

1. Dividend Yield = Dividend /Market Price Per share = 1.71/57 = 3%

2. Book Value = Total assets - Total liabilities - preferred stock = 20,000,000 - 12,000,000 - 2,500,000 = 5,500,000
No of shares = 300,000
Book value per share = 5,500,000/300,000 = 18.33

3. Earnings per share = (Profit after Tax - Prefrred Stock Dividend)/No of Share = (500,000-225,000)/300,000 = 1.25

4. Price/Earning ratio = Price Per share/Earnings Per share = 57/(1.25) = 45.6

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