Question

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		260,000
Merchandise inventory		350,000
Prepaid expenses		10,000
Total current assets		641,000
Property and equipment, net		880,000
Total assets	$	1,521,000
Liabilities and Stockholders' Equity
Liabilities:
Current liabilities	$	200,000
Bonds payable, 8%		380,000
Total liabilities		580,000
Stockholders’ equity:
Common stock, $10 per value	$	120,000
Retained earnings		821,000
Total stockholders’ equity		941,000
Total liabilities and stockholders’ equity	$	1,521,000

Castile Products, Inc. Income Statement For the Year Ended December 31
Sales	$	2,180,000
Cost of goods sold		1,200,000
Gross margin		980,000
Selling and administrative expenses		620,000
Net operating income		360,000
Interest expense		30,400
Net income before taxes		329,600
Income taxes (30%)		98,880
Net income	$	230,720

Account balances at the beginning of the year were: accounts receivable, $190,000; and inventory, $270,000. All sales were on account.

Assume that Castile Products, Inc., paid dividends of $3.45 per share during the year. Also assume that the company’s common stock had a market price of $62 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. (i.e., 0.1234 should be entered as 12.34).)

3. Dividend yield ratio. (Round your percentage answer to 2 decimal places. (i.e., 0.1234 should be entered as 12.34).)

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.)

Answer 1