Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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,

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 200,000
Merchandise inventory 370,000
Prepaid expenses 11,000
Total current assets 600,000
Property and equipment, net 910,000
Total assets $ 1,510,000
Liabilities and Stockholders' Equity
Liabilities:
Current liabilities $ 220,000
Bonds payable, 10% 320,000
Total liabilities 540,000
Stockholders equity:
Common stock, $10 par value $ 160,000
Retained earnings 810,000
Total stockholders equity 970,000
Total liabilities and equity $ 1,510,000

Castile Products, Inc. Income Statement For the Year Ended December 31
Sales $ 2,250,000
Cost of goods sold 1,200,000
Gross margin 1,050,000
Selling and administrative expenses 640,000
Net operating income 410,000
Interest expense 32,000
Net income before taxes 378,000
Income taxes (30%) 113,400
Net income $ 264,600

Account balances at the beginning of the year were: accounts receivable, $180,000; and inventory, $340,000. 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 $68 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

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Certificate Of Cloud Auditing Knowledge Study Guide

Authors: Isaca

1st Edition

1604208619, 978-1604208610

More Books

Students also viewed these Accounting questions