Question
In: Accounting
The following information was taken from the financial statements of Tolbert Inc. for December 31 of...
The following information was taken from the financial statements of Tolbert Inc. for December 31 of the current fiscal year:
| Common stock, $15 par value (no change during the year) | $3,600,000 |
| Preferred $4 stock, $200 par (no change during the year) | 6,000,000 |
The net income was $792,000 and the declared dividends on the common stock were $60,000 for the current year. The market price of the common stock is $19.60 per share.
For the common stock, determine (a) the earnings per share, (b) the price-earnings ratio, (c) the dividends per share, and (d) the dividend yield. If required, round your answers to two decimal places.
| a. Earnings per Share | $ | |
| b. Price-Earnings Ratio | ||
| c. Dividends per Share | $ | |
| d. Dividend Yield | % |
Solutions
Expert Solution
Number of common stock = 3,600,000/ 15 = 240000
Number of preferred stock = 6000000/ 200 = 30000
Annual dividend on preferred stock = 30000* 4 = 120000
EPS = (net income – preferred dividend)/ number of common stock
= (792000 – 120000)/ 240000
= 672000/ 240000
= 2.8 per share
Price earnings ratio = price of stock/ EPS
= 19.60/ 2.8
= 7
Dividend per share = 60000/ 240000
= $ 0.25 per share
Dividend yield = dividend/ price per share
= 0.25/ 19.60
= 0.0128 or 1.28%
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ekkarill92 answered 1 year agoRelated Solutions
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