Question

In: Finance

Company ZYX has sales of $664000, costs of $255000, depreciation expense of $45000, interest expense of...

Company ZYX has sales of $664000, costs of $255000, depreciation expense of $45000, interest expense of $31000, and a tax rate of 30.00%. The firm paid out $108000 in cash dividends, and has 30,000 shares of common stock outstanding. What is the earnings per share (EPS) and dividends per share (DPS)?

A.

$7.77 and $3.60

B.

$9.01 and $4.15

C.

$8.65 and $3.60

D.

$7.77 and $4.80

Expert Solution

Answer: A
$7.77 and $3.60

Solution:

Income Statement
Particulars	$
Sales	$ 664,000
Less: Costs	$ 255,000
EBITDA	$ 409,000
Less: Depreciation	$ 45,000
EBIT	$ 364,000
Less: Interest expense	$ 31,000
EBT	$ 333,000
Less: Tax at 30%	$ 99,900
Earnings Available for shareholders	$ 233,100
Number of shares	30,000
EPS	$ 7.77

Here,

EPS = Earnings Available for shareholder / Number of shares

Amount of dividend paid	$ 108,000
Number of shares	30,000
DPS	$ 3.60

Here,
DPS = Amount of dividend paid / Number of shares.

Note:
EBITDA = Earnings Before Interest, Taxes, Depreciation and Amortization
EBIT = Earnings Before Interest and Taxes
EBT = Earnings Before Tax
EPS = Earning Per Share
DPS = Dividend Per Share

jeff jeffy answered 1 year ago

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