Question

You are given the following information for Smashville, Inc.  

Cost of goods sold:	$	175,000
Investment income:	$	2,800
Net sales:	$	237,000
Operating expense:	$	42,000
Interest expense:	$	7,400
Dividends:	$	10,000
Tax rate:		30	%

Current liabilities:	$	18,000
Cash:	$	21,000
Long-term debt:	$	10,000
Other assets:	$	36,000
Fixed assets:	$	89,000
Other liabilities:	$	5,000
Investments:	$	12,000
Operating assets:	$	24,000

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.)

Book value per share =

Earnings per share =

Cash flow per share =

Answer 1

Ans. 1	To calculate book value per share first of all we need to calculate total stockholder's equity.
	Particulars	Amount	Amount
	Assets:
	Cash	$21,000
	Other assets	$36,000
	Fixed assets	$89,000
	Investments	$12,000
	Operating assets	$24,000
	Total Assets (a)		$182,000
	Liabilities:
	Current liabilities	$18,000
	Long term debt	$10,000
	Other liabilities	$5,000
	Total liabilities   (b)		$33,000
	Total Stockholder's Equity (a-b)		$149,000
	Book value per share    =   Total stockholder's equity / Shares outstanding
	$149,000 / 17,000
	$8.76	per share
Ans. 2	To calculate earnings per share first of all we need to calculate Net income.
	Particulars	Amount
	Net sales revenue	$237,000
	Less: Cost of goods sold	-$175,000
	Gross margin	$62,000
	Less: Operating expenses:	-$42,000
	Operating income (EBIT)	$20,000
	Add: Investment income	$2,800
	Less: Interest expenses	-$7,400
	Earnings before tax	$15,400
	Less: Tax ($15,400 * 30%)	-$4,620
	Net income	$10,780
	Earning per share =   Net income / Shares outstanding
	$10,780 / 17,000
	$0.63	per share
Ans. 3	Cash flow per share   =   (Net income + Depreciation expense) / Shares outstanding
	($10,780 + $15,000) / 17,000
	$25,780 / 17,000
	$1.52	per share
	Total cash flow is equal to the sum of Net income and deprecation expenses.