Question

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: Common stock, $30 par value (no change during the year) $5,100,000 Preferred $4 stock, $200 par (no change during the year) 4,000,000 The net income was $556,000 and the declared dividends on the common stock were $42,500 for the current year. The market price of the common stock is $19.60 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. If required, round your answers to two decimal places a. Earnings per Share b. Price-Earnings Ratio c. Dividends per Share d. Dividend Yield % Chock My Work Previous Next Fomainia more Choek Mv Work

Answer 1

Solution a:

Earning per share = (Net income - Preferred dividend) /outstanding common shares

= ($556,000 - 20000*$4) /170000 = $2.80 per share

Solution b:

Price earning ratio = Market price per share / Earning per share = $19.60 / $2.80 = 7 times

Solution c:

Dividend per share = $42,500 / 170000 = $0.25 per share

solution d:

Dividend yield = DPS / MPS = $0.25 / $19.60 = 1.28%