Exercise 12-11

Matthias Medical manufactures hospital beds and other institutional furniture. The companys comparative balance sheet and income statement for 2012 and 2013 follow.

Matthias Medical Comparative Balance Sheet As of December 31
		2013		2012
Assets
Current assets
Cash		$344,000		$417,400
Accounts receivable, net		1,066,600		776,500
Inventory		732,000		681,000
Other current assets		305,000		247,050
Total current assets		2,447,600		2,121,950
Property, plant, & equipment, net		8,719,875		8,369,115
Total assets		$11,167,475		$10,491,065
Liabilities and Stockholders Equity
Current liabilities		$3,188,000		$2,846,100
Long-term debt		3,702,700		3,892,600
Total liabilities		6,890,700		6,738,700
Preferred stock, $5 par value		52,400		52,400
Common stock, $0.25 par value		191,000		103,800
Retained earnings		4,033,375		3,596,165
Total stockholders equity		4,276,775		3,752,365
Total liabilities and stockholders equity		$11,167,475		$10,491,065

Matthias Medical Comparative Income Statement and Statement of Retained Earnings For the Year
		2013		2012
Sales revenue (all on account)		$10,210,000		$9,614,000
Cost of goods sold		5,754,000		5,298,700
Gross profit		4,456,000		4,315,300
Operating expenses		2,840,200		2,634,150
Net operating income		1,615,800		1,681,150
Interest expense		319,000		308,700
Net income before taxes		1,296,800		1,372,450
Income taxes (30%)		389,040		411,735
Net income		$907,760		$960,715
Dividends paid
Preferred dividends		29,550		29,550
Common dividends		441,000		498,000
Total dividends paid		470,550		527,550
Net income retained		437,210		433,165
Retained earnings, beginning of year		3,596,165		3,163,000
Retained earnings, end of year		$4,033,375		$3,596,165

Calculate the earnings per share (average of 356,000 shares outstanding for the year) for 2013. (Round answer to 2 decimal places, e.g. 2.55.)

Earning per share

$ per share

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Calculate the price/earnings ratio (market price of $45 at year-end) for 2013. (Round answer to 2 decimal places, e.g. 2.55.)

Price/earnings ratio

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Calculate the dividend payout ratio (dividends of $1.04 per common share for the year) for 2013. (Round answer to 2 decimal places, e.g. 2.55%.)

Dividend payout ratio

%