Comparative financial statements for Weller Corporation a me

Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December 31 appear below. The company did not issue any new common stock during the year. A total of 990,000 shares of common stock were outstanding. The interest rate on the bonds, which were sold at their face value, was 12%. The income tax rate was 40% and the dividend per share of common stock was $0.40 this year. The market value of the company’s common stock at the end of the year was $27.50. All of the company’s sales are on account.

Earnings per share. (Round your answer to 2 decimal places.)

Price-earnings ratio. (Round your intermediate calculations and final answer to 2 decimal places.)

Dividend payout ratio. (Round your intermediate calculations and final answer to 2 decimal places.)

Dividend yield ratio. (Round your intermediate calculations and final answer to 2 decimal places.)

Book value per share. (Round your answer to 2 decimal places.)

Solution

No of shares outstanding=9,90,000
Dividend per share=0.40
Market value per share=27.50
Net income=66,00,000
Total shareholders’ equity=4,09,04,000

1.Earnings per share = (Earnings after tax/No of Shares) = ($66,00,000/9,90,000) = $6.67
2.Price earnings ratio = Market price per share/ Earnings per share = ($27.50/$6.67) = 4.12
3.Dividend pay-out ratio = Dividend paid/Total earnings after tax =($3,96,000/$66,00,000)=0.06 or 6.00%
4.Dividend yield ratio = Dividend per share/Market price per share = ($0.40/$27.5) =1.45%
5.Book value per share = Shareholder funds/No of shares = ($4,09,04,000/9,90,000) =$41.3