Question

You are given the following information for Smashville, Inc.  

Cost of goods sold:	$	174,000
Investment income:	$	1,400
Net sales:	$	379,000
Operating expense:	$	86,000
Interest expense:	$	7,400
Dividends:	$	8,000
Tax rate:		40	%

Current liabilities:	$	21,000
Cash:	$	21,000
Long-term debt:	$	46,000
Other assets:	$	38,000
Fixed assets:	$	130,000
Other liabilities:	$	3,000
Investments:	$	34,000
Operating assets:	$	64,000

During the year, Smashville, Inc., had 25,000 shares of stock outstanding and depreciation expense of $15,000. Calculate the book value per share, earnings per share, and cash flow per share. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Answer 1

Book Value = A-L = (cash+other assets+fixed assets+investments+operating assets)-(current liabilities+long term debt+ other liabilities)

Book Value = (21,000+38,000+130,000+34,000+64,000)-(21,000+46,000+ 3,000)

Book Value = 217,000

Book value per share = Book value/Number of shares outstanding

Book value per share = 217,000/25000

Book value per share = $8.68

Net income = [(Sales + Investment income)- (cost of goods sold+Operating expense+interest expense)]X(1-tax rate)

Net income = [(379,000 + 1,400)- (174,000+86,000+7,400)]X(1-0.40)

Net income =67,800

Earning per share = Net income /Number of shares outstanding

Earning per share = 67,800 /25,000

Earning per share = $ 2.71

Cash flow per share = (Net income+ Depreciation)/ Number of shares outstanding

Cash flow per share = (67,800+15000)/25000

Cash flow per share = $3.31