Share
Explore BrainMass

Computation of ratios, profit margins and earnings per shares

Slaubaugh Corporation's most recent balance sheet and income statement appear below:
Statement of Financial Position
December 31, Year 2 and Year 1
(in thousands of dollars)

Year 2 Year 1
Assets
Current assets:
Cash.................................................................... $ 100 $ 140
Accounts receivable.............................................. 160 180
Inventory.............................................................. 210 190
Prepaid expenses.................................................. 40 50
Total current assets.................................................. 510 560
Plant and equipment, net.......................................... 860 820
Total assets............................................................. $1,370 $1,380

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable................................................. $ 160 $ 180
Accrued liabilities.................................................. 80 80
Notes payable, short term..................................... 80 80
Total current liabilities.............................................. 320 340
Bonds payable......................................................... 70 100
Total liabilities.......................................................... 390 440
Stockholders' equity:
Preferred stock, $100 par value, 10%................... 200 200
Common stock, $1 par value................................ 200 200
Additional paid-in capital-common stock.............. 130 130
Retained earnings.................................................. 450 410
Total stockholders' equity........................................ 980 940
Total liabilities & stockholders' equity...................... $1,370 $1,380

Income Statement
For the Year Ended December 31, Year 2
(in thousands of dollars)

Sales (all on account)............................................... $1,350
Cost of goods sold.................................................. 820
Gross margin........................................................... 530
Selling and administrative expense............................ 399
Net operating income............................................... 131
Interest expense....................................................... 17
Net income before taxes.......................................... 114
Income taxes (30%)................................................ 34
Net income.............................................................. $ 80

Dividends on common stock during Year 2 totaled $20 thousand. Dividends on preferred stock totaled $20 thousand. The market price of common stock at the end of Year 2 was $2.88 per share.
Required:
Compute the following for Year 2:
a. Profit Margin percentage
b. Earnings per share (of common stock).
c. Price-earnings ratio.
d. Dividend payout ratio.
e. Dividend yield ratio.
f. Return on total assets.
g. Return on common stockholders' equity.
h. Book value per share.

Attachments

Solution Summary

The solution contains computation of following ratios:Profit Margin percentage, Earnings per share, Price-earnings ratio, Dividend payout ratio, Dividend yield ratio,Return on total assets, Return on common stockholders' equity, Book value per share.

$2.19