The income statement for Stoval Company for the year ended December 31, 2008 appears below.
Sales.....................................................................$610,000
Cost of goods sold............................................. 380,000
Gross profit......................................................... 230,000
Expenses............................................................... 170,000*
Net income............................................................ $ 60,000
*Includes $30,000 of interest expense and $18,000 of income tax expense.
Additional information:
1. Common stock outstanding on January 1, 2008 was 40,000 shares. On July 1, 2008, 10,000 more shares were issued.
2. The market price of Stoval's stock was $15 at the end of 2008.
3. Cash dividends of $30,000 were paid, $6,000 of which were paid to preferred stockholders.
Compute the following ratios for 2008:
(a) Earnings per share.
(b) price-earnings.
(c) Times interest earned.