Altar Corp. earned net income of $ 118,000 and paid the minimum dividend to preferred stockholders for

Question:

Altar Corp. earned net income of $ 118,000 and paid the minimum dividend to preferred stockholders for 2014. Assume that there are no changes in common shares outstanding. Altar’s books include the following figures:

Preferred Stock—3%, $ 50 Par Value; 2,000 shares authorized,

1,000 shares issued and outstanding ……………………………....….. $ 50,000

Common Stock—$ 2 Par Value; 80,000 shares authorized,

53,000 shares issued, 51,800 shares outstanding …………………… 106,000

Paid-In Capital in Excess of Par—Common ………………………...….. 460,000

Treasury Stock—Common; 1,200 shares at cost ……………………… (24,000)

Requirements

1. Compute Altar’s EPS for the year.

2. Assume Altar’s market price of a share of common stock is $ 8 per share. Compute Altar’s price/earnings ratio for the year.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...