Weighted Average Common Shares and Time Interest Earned
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The income statement for Christensen, Inc., appears below.
CHRISTENSEN, INC.
Income Statement
For the Year Ended December 31, 2008
Sales $425,000
Cost of goods sold 243,000
Gross profit 182,000
Expenses (including $18,000 interest and $14,600 income taxes) 107,300
Net income $74,700
Additional information:
1. The weighted average common shares outstanding in 2008 were 32,000 shares.
2. The market price of Christensen, Inc. stock was $19 in 2008.
3. Cash dividends of $29,000 were paid, $8,000 of which were to preferred stockholders.
Compute the following ratios for 2008.
(a) Earnings per share. (Round answer to 2 decimal places, e.g. 10.50.)
(b) Price-earnings. (Round answer to 1 decimal place, e.g. 10.5.)
(c) Payout. (Round answer to 0 decimal places, e.g. 125.)
(d) Times interest earned. (Round answer to 1 decimal place, e.g. 10.5.)
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Solution Summary
The weighted average common shares are examined. The time interest earned is determined. Christensen, Inc's balance sheet is examined.
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