The financial statements for Castile Products, Inc., are given below:
|Castile Products, Inc.
|Accounts receivable, net||220,000|
|Total current assets||617,000|
|Property and equipment, net||810,000|
|Liabilities and Stockholders' Equity|
|Bonds payable, 11%||310,000|
|Common stock, $5 par value||$||170,000|
|Total stockholders’ equity||887,000|
|Total liabilities and stockholders' equity||$||1,427,000|
|Castile Products, Inc.
For the Year Ended December 31
|Cost of goods sold||1,180,000|
|Selling and administrative expenses||640,000|
|Net operating income||400,000|
|Net income before taxes||365,900|
|Income taxes (30%)||109,770|
Account balances at the beginning of the year were: accounts receivable, $190,000; and inventory, $340,000. All sales were on account. Assets at the beginning of the year totaled $1,070,000, and the stockholders’ equity totaled $655,000.
|Compute the following:|
Gross margin percentage. (Round your percentage answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)
Net profit margin percentage. (Round your answer to the nearest whole percentage place (i.e., 0.1234 should be entered as 12%).)
Return on total assets. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)
Return on equity. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)
|5.||Was financial leverage positive or negative for the year?|
1. Calculate earnings per share:
EPS = Net income / Number of outstanding shares
EPS = $193,300 / ($130,000 / $10)
EPS = $193,300 / 13,000 shares
EPS = $14.87 per share
Calculate dividend payout ratio:
Dividend payout ratio = Total dividends / net income
Dividend payout ratio = (13,000 shares * $3.65) / $193,900
Dividend payout ratio = $47,450 / $193,900
Dividend payout ratio = 24.5% or 0.2447
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