Here is the income statement for Tamarisk, Inc.TAMARISK, INC.Income StatementFor the Year Ended December 31, 2020Sales revenue$419,200251,500Cost of goods soldGross profit167,700Expenses (including $14,200 interest and $28,000 income taxes)73,500$94,200Net incomeAdditional information:Common stock outstanding January 1, 2020, was 24,400 shares, and 39,100 shares were outstanding at December 31, 2020.1.The market price of Tamarisk stock was $12 in 2020.2.Cash dividends of $22,800 were paid, $5,300 of which were to preferred stockholders.3.Compute the following measures for 2020. (Round all answers to 2 decimal places, e.g. 1.83 or 2.5 1%)$(a)Earnings per share(b)Price-earnings ratiotimes(c)Payout ratio(d)Times interest earnedtimes

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Asked Dec 1, 2019
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Here is the income statement for Tamarisk, Inc.
TAMARISK, INC.
Income Statement
For the Year Ended December 31, 2020
Sales revenue
$419,200
251,500
Cost of goods sold
Gross profit
167,700
Expenses (including $14,200 interest and $28,000 income taxes)
73,500
$94,200
Net income
Additional information:
Common stock outstanding January 1, 2020, was 24,400 shares, and 39,100 shares were outstanding at December 31, 2020.
1.
The market price of Tamarisk stock was $12 in 2020.
2.
Cash dividends of $22,800 were paid, $5,300 of which were to preferred stockholders.
3.
Compute the following measures for 2020. (Round all answers to 2 decimal places, e.g. 1.83 or 2.5 1%)
$
(a)
Earnings per share
(b)
Price-earnings ratio
times
(c)
Payout ratio
(d)
Times interest earned
times
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Here is the income statement for Tamarisk, Inc. TAMARISK, INC. Income Statement For the Year Ended December 31, 2020 Sales revenue $419,200 251,500 Cost of goods sold Gross profit 167,700 Expenses (including $14,200 interest and $28,000 income taxes) 73,500 $94,200 Net income Additional information: Common stock outstanding January 1, 2020, was 24,400 shares, and 39,100 shares were outstanding at December 31, 2020. 1. The market price of Tamarisk stock was $12 in 2020. 2. Cash dividends of $22,800 were paid, $5,300 of which were to preferred stockholders. 3. Compute the following measures for 2020. (Round all answers to 2 decimal places, e.g. 1.83 or 2.5 1%) $ (a) Earnings per share (b) Price-earnings ratio times (c) Payout ratio (d) Times interest earned times

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Expert Answer

Step 1

a. Compute earnings per share for 2020 as shown below:

Net income Preferred dividends
Earmings per share
Weighted average number of shares
$94, 200- S5,300
24,400 39,100
2
S88,900
31,750
=S2.80
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Net income Preferred dividends Earmings per share Weighted average number of shares $94, 200- S5,300 24,400 39,100 2 S88,900 31,750 =S2.80

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Step 2

b. Compute price earning’s ratio as shown below:

Share price
Price earnings ratio
Earnings per share
$12
S2.80
= 4.28 times
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Share price Price earnings ratio Earnings per share $12 S2.80 = 4.28 times

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Step 3

c. Compute payout ratio as show...

Dividends paid
Payout ratio
Net income
$22, 800
$94,200
0.24 (or) 24%
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Dividends paid Payout ratio Net income $22, 800 $94,200 0.24 (or) 24%

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