Exercise 15-10 Financial Ratios for Assessing Market Performance [LO15-6]

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		260,000
Merchandise inventory		340,000
Prepaid expenses		10,000
Total current assets		629,000
Property and equipment, net		910,000
Total assets	$	1,539,000
Liabilities and Stockholders' Equity
Liabilities:
Current liabilities	$	270,000
Bonds payable, 10%		320,000
Total liabilities		590,000
Stockholders equity:
Common stock, $5 par value	$	190,000
Retained earnings		759,000
Total stockholders equity		949,000
Total liabilities and stockholders equity	$	1,539,000

Castile Products, Inc. Income Statement For the Year Ended December 31
Sales	$	2,160,000
Cost of goods sold		1,210,000
Gross margin		950,000
Selling and administrative expenses		610,000
Net operating income		340,000
Interest expense		32,000
Net income before taxes		308,000
Income taxes (30%)		92,400
Net income	$	215,600

Account balances at the beginning of the year were: accounts receivable, $210,000; and inventory, $340,000. All sales were on account.

Assume that Castile Products, Inc., paid dividends of $2.85 per share during the year. Also assume that the companys common stock had a market price of $56 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 percentage final answer to 2 decimal places.)

3. Dividend yield ratio. (Round your percentage answer to 2 decimal places.)

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

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