Question

The following information was taken from the financial statements of Monarch Resources Inc. for December 31 of the current year: Common stock, $40 par value (no change during the year) $12,400,000 Preferred $10 stock, $200 par (no change during the year) 8,000,000 The net income was $1,392,000, and the declared dividends on the common stock were $272,800 for the current year. The market price of the common stock is $40 per share. For the common stock, determine (a) the earnings per share, (b) the price-earnings ratio, (c) the dividends per share, and (d) the dividend yield. Round to one decimal place except earnings per share and dividends per share, which should be rounded to the nearest cent. a. Earnings per share $ b. Price-earnings ratio c. Dividends per share $ d. Dividend yield %

The following information was taken from the financial statements of Monarch Resources Inc. for December 31 of the current year:

Common stock, $40 par value (no change during the year)	$12,400,000
Preferred $10 stock, $200 par (no change during the year)	8,000,000

The net income was $1,392,000, and the declared dividends on the common stock were $272,800 for the current year. The market price of the common stock is $40 per share.

For the common stock, determine (a) the earnings per share, (b) the price-earnings ratio, (c) the dividends per share, and (d) the dividend yield.

Round to one decimal place except earnings per share and dividends per share, which should be rounded to the nearest cent.

a. Earnings per share	$
b. Price-earnings ratio
c. Dividends per share	$
d. Dividend yield		%

Answer 1

Answer : There are 2 question but both are same so I have given answer for 1st one.

(a) Earning per share = Net income - Preference dividend / Shares otstanding

= $ 1392000 - $ 400000 / 310000

= $ 3.2

Working note - 1

Preference Dividend = Preference stock * stock value / par value

= $ 8000000*$ 10 / $ 200 = $ 400000

Shares outstanding = Total value of shares / Par value

= $12400000/ $ 40

= 310000 sharers

(b) Price Earning ratio = Market price / EPS

= $ 40/ $ 3.2

= 12.5 Times

(c) Dividend per share = Dividend on  common stock / Shares of common stock outstanding

= $ 272800 / 310000

= $ 0.88 per share

(d ) Dividend yield = Dividend per share / Market value per share

= $ 0.88* 100 / $ 40

= 2.2 %