Question

Five Measures of The ability of a company to make its periodic interest payments and repay the face amount of debt at maturity.Solvency or The ability of a firm to generate earnings.Profitability

The balance sheet for Garcon Inc. at the end of the current fiscal year indicated the following:

Bonds payable, 7%	$1,900,000
Preferred $10 stock, $100 par	273,000
Common stock, $10 par	2,184,000.00

Income before income tax was $545,300, and income taxes were $81,200 for the current year. Cash dividends paid on common stock during the current year totaled $72,072. The common stock was selling for $22 per share at the end of the year.

Determine each of the following. Round answers to one decimal place, except for dollar amounts which should be rounded to the nearest whole cent. Use the rounded answers for subsequent requirements, if required.

a. A ratio that measures the risk that interest payments will not be made if earnings decrease, calculated as income before income tax and interest expense divided by interest expense.Times interest earned ratio		times
b. The profitability ratio of net income available to common stockholders to the number of common shares outstanding.Earnings per share on common stock	$
c. The ratio of the market price per share of common stock, at a specific date, to the annual earnings per share.Price-earnings ratio
d. Measures the extent to which earnings are being distributed to common stockholders.Dividends per share of common stock	$
e. A ratio, computed by dividing the annual dividends paid per share of common stock by the market price per share at a specific date, that indicates the rate of return to stockholders in terms of cash dividend distributions.Dividend yield

Answer 1