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Five Measures of Solvency or ProfitabilityThe balance sheet for Garcon Inc. at the end of the current fiscal year indicated the following:Bonds payable, 10%$1,900,000Preferred $10 stock, $50 par97,000Common stock, $11 par1,760,550.00Income before income tax was $399,000, and income taxes were $59,500 for the current year. Cash dividends paid on common stock during the current year totaled $51,216. Thecommon stock was selling for $16 per share at the end of the year.Determine each of the following. Round answers to one decimal place, except for dollar amounts which should be rounded to the nearest whole cent. Use the rounded answers forsubsequent requirements, if requireda. Times interest earned ratiotimesb. Earnings per share on common stockc. Price-earnings ratiod. Dividends per share of common stocke. Dividend yield%

Question
Five Measures of Solvency or Profitability
The balance sheet for Garcon Inc. at the end of the current fiscal year indicated the following:
Bonds payable, 10%
$1,900,000
Preferred $10 stock, $50 par
97,000
Common stock, $11 par
1,760,550.00
Income before income tax was $399,000, and income taxes were $59,500 for the current year. Cash dividends paid on common stock during the current year totaled $51,216. The
common stock was selling for $16 per share at the end of the year.
Determine each of the following. Round answers to one decimal place, except for dollar amounts which should be rounded to the nearest whole cent. Use the rounded answers for
subsequent requirements, if required
a. Times interest earned ratio
times
b. Earnings per share on common stock
c. Price-earnings ratio
d. Dividends per share of common stock
e. Dividend yield
%
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Five Measures of Solvency or Profitability The balance sheet for Garcon Inc. at the end of the current fiscal year indicated the following: Bonds payable, 10% $1,900,000 Preferred $10 stock, $50 par 97,000 Common stock, $11 par 1,760,550.00 Income before income tax was $399,000, and income taxes were $59,500 for the current year. Cash dividends paid on common stock during the current year totaled $51,216. The common stock was selling for $16 per share at the end of the year. Determine each of the following. Round answers to one decimal place, except for dollar amounts which should be rounded to the nearest whole cent. Use the rounded answers for subsequent requirements, if required a. Times interest earned ratio times b. Earnings per share on common stock c. Price-earnings ratio d. Dividends per share of common stock e. Dividend yield %

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check_circleAnswer
Step 1

a. Compute the times interest earned ratio:

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Step 2

Working note:

Calculate Interest expenses:

Interest expenses Bonds payablex Interest trate
10
= $1,900,000 x
100
=$190.000
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Interest expenses Bonds payablex Interest trate 10 = $1,900,000 x 100 =$190.000

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Step 3

b. Compute the earnings per share on co...

Net income Preferred dividends
Earnings per share
Weighted average shares of common stock outstanding
($399,000 $59.500)- $19.400
160,050 Shares
$320,100
160,050 Shares
= $2 per share
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Net income Preferred dividends Earnings per share Weighted average shares of common stock outstanding ($399,000 $59.500)- $19.400 160,050 Shares $320,100 160,050 Shares = $2 per share

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