Exercise 1310 Financial Ratios for Assessing Market Performa

Exercise 13-10 Financial Ratios for Assessing Market Performance [LO13-6]

The financial statements for Castile Products, Inc., are given below:

Account balances at the beginning of the year were: accounts receivable, $190,000; and inventory, $260,000. All sales were on account.

Assume that Castile Products, Inc., paid dividends of $4.05 per share during the year. Also assume that the company’s common stock had a market price of $63 at the end of the year and there was no change in the number of outstanding shares of common stock during the year.

Price-earnings ratio. (Round your intermediate calculations to 2 decimal places and final answer to 1 decimal place.)

       

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

The financial statements for Castile Products, Inc., are given below:

Solution

4 Earnings per share = Net income/Outstanding common shares = 270900/(130000/5)= $10.42 Price-earnings ratio = 63/10.42= 6 times 5 Book value per share = 846000/(130000/5)= $32.54