Question
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December 31 Assets Current assets: Cash $ 20,000 Accounts receivable,
The financial statements for Castile Products, Inc., are given below: |
Castile Products, Inc. Balance Sheet December 31 | ||||||
Assets | ||||||
Current assets: | ||||||
Cash | $ | 20,000 | ||||
Accounts receivable, net | 230,000 | |||||
Merchandise inventory | 350,000 | |||||
Prepaid expenses | 7,000 | |||||
Total current assets | 607,000 | |||||
Property and equipment, net | 890,000 | |||||
Total assets | $ | 1,497,000 | ||||
Liabilities and Stockholders' Equity | ||||||
Liabilities: | ||||||
Current liabilities | $ | 210,000 | ||||
Bonds payable, 9% | 330,000 | |||||
Total liabilities | 540,000 | |||||
Stockholders equity: | ||||||
Common stock, $10 par value | $ | 110,000 | ||||
Retained earnings | 847,000 | |||||
Total stockholders equity | 957,000 | |||||
Total liabilities and equity | $ | 1,497,000 | ||||
Castile Products, Inc. Income Statement For the Year Ended December 31 | |||
Sales | $ | 2,120,000 | |
Cost of goods sold | 1,200,000 | ||
Gross margin | 920,000 | ||
Selling and administrative expenses | 650,000 | ||
Net operating income | 270,000 | ||
Interest expense | 29,700 | ||
Net income before taxes | 240,300 | ||
Income taxes (30%) | 72,090 | ||
Net income | $ | 168,210 | |
Account balances at the beginning of the year were: accounts receivable, $190,000; and inventory, $290,000. All sales were on account. |
Assume that Castile Products, Inc., paid dividends of $2.95 per share during the year. Also assume that the companys common stock had a market price of $72 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 to 1 decimal place.) |
5. | Book value per share. (Round your answer to 2 decimal places.) |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started