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Computation of ratios, profit margins and earnings per shares

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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.

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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.

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