The financial statements for Castile Products, Inc., are given below:
Castile Products, Inc.
Balance Sheet
December 31
Assets
Current assets:
Cash $21,000
Accounts receivable, net 250,000
Merchandise inventory 370,000
Prepaid expenses 12,000
Total current assets 653,000
Property and equipment, net 820,000
Total assets $1,473,000
Liabilities and Stockholders' Equity
Liabilities:
Current liabilities $260,000
Bonds payable, 11% 400,000
Total liabilities 660,000
Stockholders’ equity:
Common stock, $10 par value $150,000
Retained earnings 663,000
Total stockholders’ equity 813,000
Total liabilities and equity $1,473,000
Castile Products, Inc.
Income Statement
For the Year Ended December 31
Sales$2,200,000
Cost of goods sold 1,180,000
Gross margin 1,020,000
Selling and administrative expenses 650,000
Net operating income 370,000
Interest expense 44,000
Net income before taxes 326,000
Income taxes (30%) 97,800
Net income$228,200
Account balances at the beginning of the year were: accounts receivable, $190,000; and inventory, $330,000. All sales were on account.
Assume that Castile Products, Inc., paid dividends of $4.05 per share during the year. Also assume that the company’s common stock had a market price of $67 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.)
1.Earnings per share
Earnings per share = Net Income / Number of common shares
= $228,200 / 15,000 Shares
= $15.21 per share
2.Dividend payout ratio
Dividend payout ratio = (Dividend per share / EPS) x 100
= ($4.05 / $15.21) x 100
= 26.63%
3.Dividend yield ratio
Dividend yield ratio = (Dividend per share / Market price per share) x 100
= ($4.05 / ($67.00) x 100
= 6.0%
4.Price-earnings ratio.
Price-earnings ratio = Market price per share / EPS
= $67.00 / $15.21
= 4.4 Times
5.Book value per share
Book value per share = Total stockholders’ equity / Number of common shares
= $813,000 / 15,000 Shares
= $54.20 per share
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