Question
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December 31 Assets Current assets: Cash $ 18,000 Accounts receivable,
The financial statements for Castile Products, Inc., are given below: |
Castile Products, Inc. Balance Sheet December 31 | ||||||
Assets | ||||||
Current assets: | ||||||
Cash | $ | 18,000 | ||||
Accounts receivable, net | 230,000 | |||||
Merchandise inventory | 350,000 | |||||
Prepaid expenses | 9,000 | |||||
Total current assets | 607,000 | |||||
Property and equipment, net | 910,000 | |||||
Total assets | $ | 1,517,000 | ||||
Liabilities and Stockholders' Equity | ||||||
Liabilities: | ||||||
Current liabilities | $ | 250,000 | ||||
Bonds payable, 11% | 310,000 | |||||
Total liabilities | 560,000 | |||||
Stockholders equity: | ||||||
Common stock, $10 par value | $ | 130,000 | ||||
Retained earnings | 827,000 | |||||
Total stockholders equity | 957,000 | |||||
Total liabilities and equity | $ | 1,517,000 | ||||
Castile Products, Inc. Income Statement For the Year Ended December 31 | |||
Sales | $ | 2,240,000 | |
Cost of goods sold | 1,180,000 | ||
Gross margin | 1,060,000 | ||
Selling and administrative expenses | 650,000 | ||
Net operating income | 410,000 | ||
Interest expense | 34,100 | ||
Net income before taxes | 375,900 | ||
Income taxes (30%) | 112,770 | ||
Net income | $ | 263,130 | |
Account balances at the beginning of the year were: accounts receivable, $140,000; and inventory, $340,000. All sales were on account. |
Assume that Castile Products, Inc., paid dividends of $2.55 per share during the year. Also assume that the companys common stock had a market price of $57 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.)
|
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