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The following information was taken from the financial statements of KIM Distributors, for December 31 of...

The following information was taken from the financial statements of KIM Distributors, for December 31 of the current year:

Common stock, $5 par value (no change during the year) ……………………………..$1,500,000

Preferred $5 stock, $50 par (no change during the year) ………………………………….      450,000

The net income was $450,000, and the declared dividends on the common stock were $75,000 for the current year. The market price of the common stock is $20 per share.

For the common stock, determine (a) earnings per share, (b) the price-earnings ratio, (c) the dividends per share, and, (d) the dividend yield. Round EPS to two decimal places, and the rest to one decimal place.

             a.   Earnings per share

           

             b.   Price-earnings ratio

     c. Dividends per share

              d. Dividend yield

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Expert Solution

The following information was taken from the financial statements of KIM Distributors, for December 31 of the current year:

Common stock, $5 par value =.$1,500,000

Preferred $5 stock, $50 par= 450,000

The net income was =$450,000,

The declared dividends on the common stock were= $75,000

The market price of the common stock is = $20 per share.

a) Earnings per share,
EPS      
(450000-(450000/50*5))/300000   1.35  


b.Price-earnings ratio

PE ratio=MPS/EPS      
20/1.35   14.81

c. Dividends per share
=75000/300000   0.25

d. Dividend yield
  
DPS/MPS= .25/20   0.0125  
or .0125*100=1.25%  

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ekkarill92 answered 2 years ago
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