BuyFindarrow_forward

Financial Accounting

15th Edition
Carl Warren + 2 others
ISBN: 9781337272124

Solutions

Chapter
Section
BuyFindarrow_forward

Financial Accounting

15th Edition
Carl Warren + 2 others
ISBN: 9781337272124
Textbook Problem
3 views

Earnings per share, price-earnings ratio, dividend yield

The following information was taken from the financial statements of Tolbert Inc. for December 31 of the current fiscal year:

Chapter 17, Problem 21E, Earnings per share, price-earnings ratio, dividend yield The following information was taken from

The net income was $1,750,000, and the declared dividends on the common stock were $1,125,000 for the current year. The market price of the common stock is $45 per share.

For the common stock, determine (a) the earnings per share, (b) the price-earnings ratio, (c) the dividends per share, and (d) the dividend yield. Round ratios and percentages to one decimal place, except for per-share amounts.

(a)

To determine

Determine Earnings per share on the common stock.

Explanation

Financial Ratios: Financial ratios are the metrics used to evaluate the liquidity, capabilities, profitability, and overall performance of a company.

Earnings per share help to measure the profitability of a company. Earnings per share are the amount of profit that is allocated to each share of outstanding stock.

Formula:

Earningspershare = Netincome – PreferreddividendsWeighted average number of common shares outstanding

Calculate Earnings per share on the common stock.

Earnings per share=[Net incomePreferred dividends(Weighted average shares of common stock outstanding)]=$1,750,000$250,000500,000shares=$1,500,00050,000shares=$3

(b)

To determine

Determine Price earnings ratio.

(c)

To determine

Determine Dividend per share of common stock.

(d)

To determine

Determine Dividend yield ratio.

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

Explain why the long-run aggregate-supply curve is vertical.

Brief Principles of Macroeconomics (MindTap Course List)

EXPECTATIONS THEORY Assume that the real risk-free rate is 2% and that the maturity risk premium is zero. If a ...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

What are footings in accounting?

College Accounting (Book Only): A Career Approach