Markus Company\'s common stock sold for $3.25 per share at the end of this year.
ID: 2527293 • Letter: M
Question
Markus Company's common stock sold for $3.25 per share at the end of this year. The company paid a common stock dividend of $0.65 per share this year. It also provided the following data excerpts from this year's financial statements: Ending Beginning Balance Balance Cash Accounts receivable Inventory Current assets Total assets Current liabilities Total liabilities Common stock, $1 par value Total stockholders' equity $ 39,000 $ 35,200 $ 72,000 $ 56,200 $ 61,900 $ 72,000 $ 172,900 $ 163,400 531,000 $550,400 $ 69,000 $ 60,000 $156,000 $ 140,400 $ 132,000 $ 132,000 $ 375,000 $ 410,000 Total liabilities and stockholders' equity $ 531,000 $ 550,400 This Year Sales (all on account) 850,000 $ 493,000 357,000 Net operating income $ 173,375 $ 9,500 $ 114,712 Cost of goods solo Gross margin Interest expense Net incomeExplanation / Answer
Solution (1):
Earnings per share (EPS)
= Net Income/Average Common Shares Outstanding
=$ 114,712 / 132,000 shares*
=$ 0.87 (Answer)
*$ 132,000 Common stock, $ 1 par value. So,
Number of common shares = $ 132,000/ $ 1 = 132,000 shares
Solution (3):
Dividend payout ratio
= Dividends per share / EPS X 100
=$ 0.65 / $ 0.87 X 100
=75 % (Answer)
Dividend Yield Ratio
= Dividends per share / Market price per share X 100
=$ 0.65 / $ 3.25 X 100
=20 % (Answer)
Solution (5):
Return on Equity
= Net Income / Average Stockholder’s equity X 100
= Net Income / [(Beginning + Ending Stockholder’s equity)/2] X 100
=$ 114,712 / [($ 410,000 + $ 375,000)/2] X 100
=$ 114,712 /$ 392,500 X 100
= 29 % (Answer)
Solution (7):
Working Capital
=Current Assets -Current Liabilities
=$ 172,900 - $ 69,000
=$ 103,900 (Answer)
Current Ratio
=Current Assets /Current Liabilities
=$ 172,900 / $ 69,000
=2.51 (Answer)