Question

Calculate EPS (Earnings per share) based on the given below Sales \$ 1,500 COGS 450 Interest...

1. Calculate EPS (Earnings per share) based on the given below
 Sales \$ 1,500 COGS 450 Interest Paid 30 Preferred dividends 90 Number of common stock 105
1. Randy’s company has \$ 180 million in total assets, \$ 35 million in notes payable, and \$31 million in long term debt. Calculate debt ratio?
2. What does debt ratio measures?

Earning per share = Net income available to equity shareholders/No.of shares outstanding

Calculation of Net income available to equity shareholders:

 Particulars Amount Sales 1500 COGS (450) Interest paid (30) Preferred dividends (90) Net income available to equity shareholders 930

Number of common stock = 105

Earning per share = 930/105

= 8.86

Debt ratio = Short term debt+Long term debt/Total assets

Short term debt = 35 million

Long term debt = 31 million

Total assets = 180 million

Debt ratio = 35 million + 31 million/180 million

= 66 million/180 million

= 0.36

Debt ratio usually measures the company's leverage. It is expressed as ratio of total debt to total assets.