Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The financial statements for Castile Products, Incorporated, are given below: Castile Products, Incorporated Balance Sheet December 31 Assets Current assets: Cash $ 19,000 Accounts receivable,

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

Castile Products, Incorporated Balance Sheet December 31
Assets
Current assets:
Cash $ 19,000
Accounts receivable, net 180,000
Merchandise inventory 360,000
Prepaid expenses 7,000
Total current assets 566,000
Property and equipment, net 900,000
Total assets $ 1,466,000
Liabilities and Stockholders' Equity
Liabilities:
Current liabilities $ 270,000
Bonds payable, 12% 310,000
Total liabilities 580,000
Stockholders equity:
Common stock, $10 per value $ 110,000
Retained earnings 776,000
Total stockholders equity 886,000
Total liabilities and stockholders equity $ 1,466,000

Castile Products, Incorporated Income Statement For the Year Ended December 31
Sales $ 2,210,000
Cost of goods sold 1,240,000
Gross margin 970,000
Selling and administrative expenses 620,000
Net operating income 350,000
Interest expense 37,200
Net income before taxes 312,800
Income taxes (30%) 93,840
Net income $ 218,960

Account balances at the beginning of the year were: accounts receivable, $190,000; and inventory, $320,000. All sales were on account.

Assume that Castile Products, Incorporated paid dividends of $2.25 per share during the year. Also assume that the companys common stock had a market price of $64 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.)

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

International Accounting

Authors: Radebaugh

4th Edition

0471136646, 9780471136644

More Books

Students also viewed these Accounting questions

Question

What is a DNR and why are they used?

Answered: 1 week ago