Exercise 16-10 (Static) Financial Ratios for Assessing Market Performance [LO16-6]

The financial statements for Castile Products, Incorporated, are given below:

Castile Products, Incorporated Balance Sheet December 31
Assets
Current assets:
Cash	$ 6,500
Accounts receivable, net	35,000
Merchandise inventory	70,000
Prepaid expenses	3,500
Total current assets	115,000
Property and equipment, net	185,000
Total assets	$ 300,000
Liabilities and Stockholders' Equity
Liabilities:
Current liabilities	$ 50,000
Bonds payable, 10%	80,000
Total liabilities	130,000
Stockholders equity:
Common stock, $ 5 per value	30,000
Retained earnings	140,000
Total stockholders equity	170,000
Total liabilities and stockholders equity	$ 300,000

Castile Products, Incorporated Income Statement For the Year Ended December 31
Sales	$ 420,000
Cost of goods sold	292,500
Gross margin	127,500
Selling and administrative expenses	89,500
Net operating income	38,000
Interest expense	8,000
Net income before taxes	30,000
Income taxes (30%)	9,000
Net income	$ 21,000

Account balances at the beginning of the year were: accounts receivable, $25,000; and inventory, $60,000. All sales were on account.

Assume that Castile Products, Incorporated, paid dividends of $2.10 per share during the year. Also assume that the companys common stock had a market price of $42 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 nearest whole number (i.e., 0.1234 should be entered as 12).)

3. Dividend yield ratio. (Round your intermediate calculations to 2 decimal places. Round your percentage final answer to nearest whole number (i.e., 0.1234 should be entered as 12).)

4. Price-earnings ratio. (Round your intermediate calculations to 2 decimal places. Round your answer to nearest whole number.)

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