Exercise 13-10 Financial Ratios for Assessing Market Performance [LO13-6]

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					210,000
Merchandise inventory					390,000
Prepaid expenses					8,000
Total current assets					627,000
Property and equipment, net					900,000
Total assets				$	1,527,000
Liabilities and Stockholders' Equity
Liabilities:
Current liabilities				$	200,000
Bonds payable, 11%					320,000
Total liabilities					520,000
Stockholders equity:
Common stock, $5 par value				$	120,000
Retained earnings					887,000
Total stockholders equity					1,007,000
Total liabilities and equity				$	1,527,000

Castile Products, Inc. Income Statement For the Year Ended December 31
Sales	$	2,280,000
Cost of goods sold		1,210,000
Gross margin		1,070,000
Selling and administrative expenses		630,000
Net operating income		440,000
Interest expense		35,200
Net income before taxes		404,800
Income taxes (30%)		121,440
Net income	$	283,360

Account balances at the beginning of the year were: accounts receivable, $140,000; and inventory, $330,000. All sales were on account.

Assume that Castile Products, Inc., paid dividends of $2.65 per share during the year. Also assume that the companys common stock had a market price of $55 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 final percentage answer to 1 decimal place (i.e., 0.1234 should be considered as 12.3%).)

3.	Dividend yield ratio. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be considered as 12.3%).)

4.	Price-earnings ratio. (Round your intermediate calculations to 2 decimal places and final answer to1 decimal place.)

5.	Book value per share. (Round your answer to 2 decimal places.)