The financial statements for Castile Products, Inc., are given below:

Castile Products, Inc.
Balance Sheet
December 31
Assets
Current assets:
Cash $ 20,000
Accounts receivable, net 230,000
Merchandise inventory 350,000
Prepaid expenses 7,000
Total current assets 607,000
Property and equipment, net 890,000
Total assets $ 1,497,000
Liabilities and Stockholders' Equity
Liabilities:
Current liabilities $ 210,000
Bonds payable, 9% 330,000
Total liabilities 540,000
Stockholdersâ€™ equity:
Common stock, $10 par value $ 110,000
Retained earnings 847,000
Total stockholdersâ€™ equity 957,000
Total liabilities and equity $ 1,497,000
Castile Products, Inc.
Income Statement
For the Year Ended December 31
Sales $ 2,120,000
Cost of goods sold 1,200,000
Gross margin 920,000
Selling and administrative expenses 650,000
Net operating income 270,000
Interest expense 29,700
Net income before taxes 240,300
Income taxes (30%) 72,090
Net income $ 168,210
Account balances at the beginning of the year were: accounts receivable, $190,000; and inventory, $290,000. All sales were on account.

Assume that Castile Products, Inc., paid dividends of $2.95 per share during the year. Also assume that the companyâ€™s common stock had a market price of $72 at the end of the year and there was no change in the number of outstanding shares of common stock during the year.

Required:
Compute financial ratios as follows:
1.
Earnings per share. (Round your answer to 2 decimal places.)

2.
Dividend payout ratio. (Round your intermediate calculations to 2 decimal places. Round your final percentage answer to 1 decimal place (i.e., 0.1234 should be considered as 12.3%).)

3.
Dividend yield ratio. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be considered as 12.3%).)

4.
Price-earnings ratio. (Round your intermediate calculations to 2 decimal places and final answer to 1 decimal place.)

5.
Book value per share. (Round your answer to 2 decimal places.)

Question

02-06-2020
Business

contestada

The financial statements for Castile Products, Inc., are given below:

Castile Products, Inc.
Balance Sheet
December 31
Assets
Current assets:
Cash $ 20,000
Accounts receivable, net 230,000
Merchandise inventory 350,000
Prepaid expenses 7,000
Total current assets 607,000
Property and equipment, net 890,000
Total assets $ 1,497,000
Liabilities and Stockholders' Equity
Liabilities:
Current liabilities $ 210,000
Bonds payable, 9% 330,000
Total liabilities 540,000
Stockholdersâ€™ equity:
Common stock, $10 par value $ 110,000
Retained earnings 847,000
Total stockholdersâ€™ equity 957,000
Total liabilities and equity $ 1,497,000
Castile Products, Inc.
Income Statement
For the Year Ended December 31
Sales $ 2,120,000
Cost of goods sold 1,200,000
Gross margin 920,000
Selling and administrative expenses 650,000
Net operating income 270,000
Interest expense 29,700
Net income before taxes 240,300
Income taxes (30%) 72,090
Net income $ 168,210
Account balances at the beginning of the year were: accounts receivable, $190,000; and inventory, $290,000. All sales were on account.

Assume that Castile Products, Inc., paid dividends of $2.95 per share during the year. Also assume that the companyâ€™s common stock had a market price of $72 at the end of the year and there was no change in the number of outstanding shares of common stock during the year.

Required:
Compute financial ratios as follows:
1.
Earnings per share. (Round your answer to 2 decimal places.)

2.
Dividend payout ratio. (Round your intermediate calculations to 2 decimal places. Round your final percentage answer to 1 decimal place (i.e., 0.1234 should be considered as 12.3%).)

3.
Dividend yield ratio. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be considered as 12.3%).)

4.
Price-earnings ratio. (Round your intermediate calculations to 2 decimal places and final answer to 1 decimal place.)

5.
Book value per share. (Round your answer to 2 decimal places.)

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nicof2010 nicof2010 · Answer 1 · 2020-06-04T02:58:33+02:00

Answer:

1. The Earning per share is $ 15.29 per share

2. The Dividend payout ratio is 0.193 or 19.3%

3. The Dividend yield ratio is 0.041 or 4.1%

4. The Price-earnings ratio is 4.7

5. The Book value per share is $ 87 per share

Explanation:

1. To calculate Earning per share we use the following formula:

Earning per share = Net income /Number of common shares

Number of common shares= 110,000 /10 = 11,000 shares

Earning per share= $168,210 /11,000

Earning per share = $ 15.29 per share

2. To calculate Dividend payout ratio we use the following formula:

Dividend paid = 2.95*11n000= $32,450

Payout ratio = $32,450 / $168,210

Payout ratio =0.193 or 19.3%

3. To calculate Dividend yield ratio we use the following formula:

Dividend yield ratio =dividend /current price

Dividend yield ratio = 2.95 / 72

Dividend yield ratio =0.041 or 4.1%

4. To calculate Price-earnings ratio we use the following formula:

PE ratio =Market price per share /EPS

PE ratio= 72 /15.29

PE ratio = 4.7

5. To calculate Book value per share we use the following formula:

Book value per share =Total sharehoders equity /number of share

Book value per share= $957,000/11,000

Book value per share= $ 87 per share

tallinn tallinn · Answer 2 · 2022-04-06T12:29:56+02:00

1. The Earning per share is $15.29 per share

2. The Dividend payout ratio is 19.3%

3. The Dividend yield ratio is 4.1%

4. The Price-earnings ratio is 4.7

Calculation of Net income

1. To Compute Earning per share we use the following formula:

The formula of Earning per share is = Net income /Number of common shares

Number of common shares is = 110,000 /10 = 11,000 shares

Earning per share is = $168,210 /11,000

Earning per share is = $15.29 per share

2. To compute Dividend payout ratio we use the following formula:

Dividend paid is = 2.95*11n000= $32,450

Payout ratio is = $32,450 / $168,210

Therefore, Payout ratio =0.193 or 19.3%

3. To Compute Dividend yield ratio we use the following formula:

Then Dividend yield ratio =dividend /current price

Dividend yield ratio = 2.95 / 72

Therefore, Dividend yield ratio is = 0.041 or 4.1%

4. To Compute Price-earnings ratio we use the following formula:

PE ratio is =Market price per share /EPS

PE ratio is = 72 /15.29

Thus, PE ratio = 4.7

5. To Compute the Book value per share we use the following formula:

Book value per share is =Total shareholders equity /number of share

Then, Book value per share= $957,000/11,000

Hence, Book value per share= $ 87 per share

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