Alberto Corp. has common and preferred shares outstanding with the following characteristics:Alberto Corp. has earnings per share of
Answer(s): C
EPS equals the income available for distribution to common shareholders divided by the number of common shares outstanding, or $4.00 [($250,000 NI - $50,000 preferred dividends) ÷ 50,000 common shares]
Presented below are partial year-end financial statement data for companies A and B.If Company A has 60 common shares outstanding, then it has a book value per share, to the nearest cent, of
The book value per share for Company A equals the sum of common stock and retained earnings, divided by the number of shares, or $4.17 [($100 + $150) ÷ 60].
A company has 100,000 outstanding common shares with a market value of $20 per share. Dividends of $2 per share were paid in the current year and the company has a dividend payout ratio of 40%. The price to earnings ratio of the company is
Answer(s): B
The P-E ratio equals the share price divided by EPS. If the dividends per share equaled $2 and the dividend-payout ratio was 40%, EPS must have been $5 ($2 ÷ 4). Accordingly, the P-E ratio is 4 ($20 share price ÷ $5 EPS).
The equity section of Smith Corporation's Statement of Financial Position is presented below.The book value per share of Smith Corporation's common stock is
Answer(s): A
The book value per common share equals the net assets (equity) attributable to common shareholders divided by the common shares outstanding, or $18.50 [($10,000,000 common stock + $18,000,000 additional paid-in capital + $9,000,000 RE) ÷ ($10,000,000 ÷ $5 par)]
The Dawson Corporation projects the following for the yearIf Dawson Corporation's common stock is expected to trade at a price-earnings ratio of eight, the market price per share (to the nearest dollar) would be
Net income is $18,000,000 [($35,000,000 EBIT -- $5,000,000 interest) x (1.0-- .4 tax rate)], and EPS is $7 [($18,000,000 NI -- $4,000,000 preferred dividends) 2,000,000 common shares]. Consequently, the market price is $56 ($7 EPS x 8 P-E ratio).
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