Homework SourseThe income statement for Sutherland Inc appears below SUTHER
The income statement for Sutherland, Inc., appears below.
SUTHERLAND, INC.
Income Statement
For the Year Ended December 31, 2017
Additional information:
Compute the following ratios for 2017. (Round Earnings per share to 2 decimal places, e.g. 1.75, and all other answers to 1 decimal place, e.g. 6.8 or 6.8% .)
| SUTHERLAND, INC. | ||
| Net sales | $400,000 | |
| Cost of goods sold | 230,000 | |
| Gross profit | 170,000 | |
| Expenses (including $16,000 interest and $24,000 income taxes) | 105,000 | |
| Net income | $ 65,000 |
Solution
EPS= Earnings/ No.of shares
=$65000/30000= $ 2.167 per share
Price Earning Ratio= Price per share/ EPS
$13/$2.167= 5.99 times ~ 6 times
Dividend per share (DPS)= $26000/30000= $0.86 per share
Payout Ratio= DPS/ EPS= 0.86/2.167= 39.69%
Time Interest Earned = Earning before Intt & Taxes/ Interest= $105000/$16000
= 6.56 times
Note:Earning before Intt & Taxes= $65000+$4000
=$105000
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