runi Weygandt Accounting Principles 12e AND INC 170000 Solu

runi Weygandt, Accounting Principles, 12e AND, INC . 170,000

Solution

Profit before tax and interest=gross profit - other expense

=170000-65000=105000

Interest earned ratio

=profit before interest and tax/interest expense

=105000/16000=6.5625 times or 6.6times

Particulars	amount
NO OF weighted Avg share	30000
Profit after tax	65000
Preferred dividend	5000
Earning available to equity(65000-5000)	60000
EPS(60000/30000)	2
Dividend per share (26000/30000)	. 866666
Payout ratio=DPS/EPS*100	43.33%
Market price of stock	13
PE RATIO=PRICE/EARNINGS=13/2	6.5TIMES
Interest expense	16000
Other expense (105000-24000-16000)	65000