Markus Company\'s common stock sold for $2.75 per share at the end of this year.
ID: 2592561 • Letter: M
Question
Markus Company's common stock sold for $2.75 per share at the end of this year. The company paid a common stock dividend of $0.55 per share this year. It also provided the following data excerpts from this year's financial statements: Ending Balance Beginning Balance $35,000 $60,000 $55,000 $150,000 $450,000 $60,000 $130,000 $120,000 $320,000 $450,000 $30,000 $50,000 $60,000 $140,000 $460,000 $40,000 $120,000 $120,000 $340,000 $460,000 Cash Total liabilities and stockholders' equity This Year $700,000 $400,000 $300,000 $140,000 $8,000 $92,400 Gross margin . Interest expenseExplanation / Answer
1. EPS = (Net Income - Dividends on Preferred Stock) / Average Outstanding Shares
= 92,400 / 120,000
= 0.77
Since the stock is at $1 par value and is equal to 120,000 hence there are 120,000 shares outstanding.
2. P/E Ratio = Market price per share / EPS
= 2.75 / 0.77
= 3.57
3. Dividend Payout Ratio = Dividend per share / EPS
= 0.55 / 0.77
= 0.71
Dividend yield ratio = Dividend per share / Market price per share
= 0.55 / 2.75
= 0.20
5. Return on Equity = Net Income/Shareholder's Equity
= 92,400 / 320,000
= 0.29
6. Book Value per share = Total shareholder equity – preferred equity / total shares outstanding
= 320,000/ 120,000
= 2.67
7. Working Capital = Current Assets – Current Liab
=150,000 – 60,000
=90,000
Current Ratio = Current Assets / Current Liabilities
= 150,000 / 60,000
= 2.5
8. Acid Test Ratio = Cash + Accounts Receivable + Short Term Investments / Current Liabilities
= 35,000 + 60,000 / 60,000
= 1.5