Question
In: Accounting
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December...
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 | 340,000 | |||||
| Prepaid expenses | 7,000 | |||||
| Total current assets | 597,000 | |||||
| Property and equipment, net | 820,000 | |||||
| Total assets | $ | 1,417,000 | ||||
| Liabilities and Stockholders' Equity | ||||||
| Liabilities: | ||||||
| Current liabilities | $ | 240,000 | ||||
| Bonds payable, 10% | 380,000 | |||||
| Total liabilities | 620,000 | |||||
| Stockholders’ equity: | ||||||
| Common stock, $5 per value | $ | 200,000 | ||||
| Retained earnings | 597,000 | |||||
| Total stockholders’ equity | 797,000 | |||||
| Total liabilities and stockholders’ equity | $ | 1,417,000 | ||||
|
Castile Products, Inc. Income Statement For the Year Ended December 31 |
|||
| Sales | $ | 2,280,000 | |
| Cost of goods sold | 1,170,000 | ||
| Gross margin | 1,110,000 | ||
| Selling and administrative expenses | 660,000 | ||
| Net operating income | 450,000 | ||
| Interest expense | 38,000 | ||
| Net income before taxes | 412,000 | ||
| Income taxes (30%) | 123,600 | ||
| Net income | $ | 288,400 | |
Account balances at the beginning of the year were: accounts receivable, $160,000; and inventory, $340,000. All sales were on account.
Assume that Castile Products, Inc., paid dividends of $3.65 per share during the year. Also assume that the company’s common stock had a market price of $68 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 percentage final answer to 2 decimal places. (i.e., 0.1234 should be entered as 12.34).)
3. Dividend yield ratio. (Round your percentage answer to 2 decimal places. (i.e., 0.1234 should be entered as 12.34).)
4. Price-earnings ratio. (Round your intermediate calculations and final answer to 2 decimal places.)
5. Book value per share. (Round your answer to 2 decimal places.)
|
Solutions
Expert Solution
Financial ratios are the ratios calculated from the variables in the financial statement. Financial ratios help to analyse the overall performance the business. Financial ratios are calculated from financial statements like, income statement, Balance Sheet, Cash flow statement, etc.
1.
Earnings per share = Net income/ Average shares outstanding
Net income = $288,400
Average shares outstanding = $200,000 / $5 = 40,000 shares
Earnings per share = $288,400/40,000 = $7.21 per share
2.
Dividend payout ratio = Dividend/ Net income
Dividend = $3.65 × ($200,000/$5) = $146,000
Net income = $288,400
Dividend payout ratio = $146,000/$288,400 = 50.62%
3.
Dividend yield ratio = Dividend per share / Market price per
share
Dividend per share = $3.65
Market price per share = $68
Dividend yield ratio = $3.65/$68 = 5.37%
4.
Price earnings ratio = Current share price / Earnings per share
Current share price = $68
Earnings per share = $7.21
Price earnings ratio = $68/$7.21 = 9.43
5.
Book value per share = Stockholders equity/ Average shares
outstanding
Stockholders equity = $797,000
Average shares outstanding = 40,000
Book value per share = $797,000/40,000 = $19.93
ekkarill92 answered 1 year agoRelated Solutions
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December...
The financial statements for Castile Products, Inc., are given
below:
Castile Products, Inc.
Balance Sheet
December 31
Assets
Current assets:
Cash
$
19,000
Accounts receivable, net
230,000
Merchandise inventory
350,000
Prepaid expenses
11,000
Total current assets
610,000
Property and equipment, net
820,000
Total assets
$
1,430,000
Liabilities and Stockholders'
Equity
Liabilities:
Current liabilities
$
260,000
Bonds payable, 11%
380,000
Total liabilities
640,000
Stockholders’ equity:
Common stock, $5 par value
$
200,000
Retained earnings
590,000
Total stockholders’ equity
790,000
Total liabilities...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December...
The financial statements for Castile Products, Inc., are given
below:
Castile Products, Inc.
Balance Sheet
December 31
Assets
Current assets:
Cash
$
21,000
Accounts receivable, net
210,000
Merchandise inventory
350,000
Prepaid expenses
9,000
Total current assets
590,000
Property and equipment, net
860,000
Total assets
$
1,450,000
Liabilities and Stockholders'
Equity
Liabilities:
Current liabilities
$
200,000
Bonds payable, 10%
310,000
Total liabilities
510,000
Stockholders’ equity:
Common stock, $10 per value
$
120,000
Retained earnings
820,000
Total stockholders’ equity
940,000
Total liabilities...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December...
The financial statements for Castile Products, Inc., are given
below:
Castile Products, Inc.
Balance Sheet
December 31
Assets
Current assets:
Cash
$
19,000
Accounts receivable, net
200,000
Merchandise inventory
330,000
Prepaid expenses
8,000
Total current assets
557,000
Property and equipment, net
880,000
Total assets
$
1,437,000
Liabilities and Stockholders'
Equity
Liabilities:
Current liabilities
$
290,000
Bonds payable, 12%
360,000
Total liabilities
650,000
Stockholders’ equity:
Common stock, $5 par value
$
120,000
Retained earnings
667,000
Total stockholders’ equity
787,000
Total liabilities...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December...
The financial
statements for Castile Products, Inc., are given below:
Castile Products, Inc.
Balance Sheet
December 31
Assets
Current
assets:
Cash
$
19,000
Accounts
receivable, net
190,000
Merchandise
inventory
400,000
Prepaid
expenses
10,000
Total current
assets
619,000
Property and
equipment, net
840,000
Total
assets
$
1,459,000
Liabilities and
Stockholders' Equity
Liabilities:
Current
liabilities
$
260,000
Bonds payable,
12%
360,000
Total
liabilities
620,000
Stockholders’
equity:
Common stock, $5
per value
$
200,000
Retained
earnings
639,000
Total
stockholders’ equity
839,000
Total
liabilities...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December...
The financial
statements for Castile Products, Inc., are given below:
Castile Products, Inc.
Balance Sheet
December 31
Assets
Current
assets:
Cash
$
21,000
Accounts
receivable, net
190,000
Merchandise
inventory
360,000
Prepaid
expenses
7,000
Total current
assets
578,000
Property and
equipment, net
890,000
Total
assets
$
1,468,000
Liabilities and
Stockholders' Equity
Liabilities:
Current
liabilities
$
230,000
Bonds payable,
8%
400,000
Total
liabilities
630,000
Stockholders’
equity:
Common stock, $5
per value
$
160,000
Retained
earnings
678,000
Total
stockholders’ equity
838,000
Total
liabilities...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December...
The financial
statements for Castile Products, Inc., are given below:
Castile Products, Inc.
Balance Sheet
December 31
Assets
Current
assets:
Cash
$
22,000
Accounts
receivable, net
220,000
Merchandise
inventory
350,000
Prepaid
expenses
9,000
Total current
assets
601,000
Property and
equipment, net
830,000
Total
assets
$
1,431,000
Liabilities and
Stockholders' Equity
Liabilities:
Current
liabilities
$
240,000
Bonds payable,
9%
330,000
Total
liabilities
570,000
Stockholders’
equity:
Common stock, $5
par value
$
100,000
Retained
earnings
761,000
Total
stockholders’ equity
861,000
Total
liabilities...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December...
The financial statements for Castile Products, Inc., are given
below:
Castile Products, Inc.
Balance Sheet
December 31
Assets
Current assets:
Cash
$
22,000
Accounts receivable, net
220,000
Merchandise inventory
300,000
Prepaid expenses
9,000
Total current assets
551,000
Property and equipment, net
870,000
Total assets
$
1,421,000
Liabilities and Stockholders' Equity
Liabilities:
Current liabilities
$
290,000
Bonds payable, 8%
380,000
Total liabilities
670,000
Stockholders’ equity:
Common stock, $5 par value
$
140,000
Retained earnings
611,000
Total stockholders’ equity
751,000
Total liabilities...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December...
The financial statements for Castile Products, Inc., are given
below:
Castile Products, Inc.
Balance Sheet
December 31
Assets
Current assets:
Cash
$
23,000
Accounts receivable, net
200,000
Merchandise inventory
370,000
Prepaid expenses
7,000
Total current assets
600,000
Property and equipment, net
840,000
Total assets
$
1,440,000
Liabilities and Stockholders'
Equity
Liabilities:
Current liabilities
$
240,000
Bonds payable, 8%
380,000
Total liabilities
620,000
Stockholders’ equity:
Common stock, $5 par value
$
160,000
Retained earnings
660,000
Total stockholders’ equity
820,000
Total liabilities...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December...
The financial statements for Castile Products, Inc., are given
below: Castile Products, Inc. Balance Sheet December 31 Assets
Current assets: Cash $ 18,000 Accounts receivable, net 250,000
Merchandise inventory 330,000 Prepaid expenses 8,000 Total current
assets 606,000 Property and equipment, net 880,000 Total assets $
1,486,000 Liabilities and Stockholders' Equity Liabilities: Current
liabilities $ 260,000 Bonds payable, 8% 340,000 Total liabilities
600,000 Stockholders’ equity: Common stock, $5 per value $ 140,000
Retained earnings 746,000 Total stockholders’ equity 886,000 Total
liabilities...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December...
The financial statements for Castile Products, Inc., are given
below:
Castile Products, Inc.
Balance Sheet
December 31
Assets
Current assets:
Cash
$
22,000
Accounts receivable, net
240,000
Merchandise inventory
330,000
Prepaid expenses
8,000
Total current assets
600,000
Property and equipment, net
900,000
Total assets
$
1,500,000
Liabilities and Stockholders'
Equity
Liabilities:
Current liabilities
$
210,000
Bonds payable, 10%
360,000
Total liabilities
570,000
Stockholders’ equity:
Common stock, $5 par value
$
110,000
Retained earnings
820,000
Total stockholders’ equity
930,000
Total liabilities...
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