SKYSONG, INC. Income Statement
What is the payout ration for the following?
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SKYSONG, INC.
Income Statement For the Year Ended December 31, 2022 |
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Sales revenue
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$404,100
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Cost of goods sold
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234,000
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Gross profit
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170,100
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Expenses (including $16,700 interest and $26,400 income taxes)
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83,500
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Net income
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$ 86,600
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Additional information:
| 1. | Common stock outstanding January 1, 2022, was 24,700 shares, and 37,100 shares were outstanding at December 31, 2022. | |
| 2. | The market price of Skysong stock was $14 in 2022. | |
| 3. | Cash dividends of $22,900 were paid, $4,900 of which were to preferred stockholders. |
Compute the following measures for 2022. (Round all answers to 2 decimal places, e.g. 1.83 or 2.51%)
| (a) | Earnings per share |
$enter earnings per share in dollars
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| (b) | Price-earnings ratio |
enter price-earnings ratio in times
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times | ||
| (c) | Payout ratio |
enter payout ratio in percentages
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% | ||
| (d) | Times interest earned |
enter times interest earned
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times |
Expert Answer
Earning per share is the portion of a company's profit allocated to each outstanding share of common stock.
EPS is the portion of a company's net income that would be allocated each outstanding share if all the profits were paid out to its shared holders.
Formula :-
Earning per share = Net income - preferred dividend / average number of shares outstanding
First we have to calculate the average number of shares outstanding for which:-
Common stock outstanding at beginning (January 1 2022) + common stock outstanding at the end of the period ( December 31st 2022) 2
24,700 +37,100 / 2 = 30,900 shares.
Earning per share = $86,600 - $4,900 /30,900 shares = $2.64 per shares.
Price earning ratio is market prospect that calculated the market value of a stock relative to its earning by comparing the market price per share by earning per share.
Formula :-
Price earning ratio = Market price per share / earning per share
Price earning ratio = $14 /$2.64 = 5.30 times.
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