Question

Chapter 12
Financial Planning Exercise 2
Calculating key financial ratios

Selected financial information about Backpacking Resources, Inc., is as follows:

Total assets	$10,000,000
Total liabilities	$3,000,000
Total preferred stock	$500,000
Total annual preferred stock dividends	$35,000
Net profits after tax	$500,000
Number of shares of common stock outstanding	450,000 shares
Current market price of common stock	$63.00 a share
Annual common stock dividends	$4.41 a share

Using the company's financial information, compute the following:

1. Dividend yield. Round the answer to two decimal places.
   %
   
2. Book value per share. Round your answer to the nearest cent.
   $   per share
   
3. Earnings per share. Round your answer to the nearest cent.
   $   per share
   
4. P/E ratio. Round the answer to two decimal places.
     times

Answer 1