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    Earnings per share (of common stock).

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    3. Espinola Corporation's most recent balance sheet and income statement appear below:

    BALANCE SHEETS
    2006 2005
    ASSETS
    Cash & equivalents $320,000 $180,000
    Accounta receivable 220,000 240,000
    Inventory 140,000 130,000
    Prepaid expenses 20,000 20,000
    Total current assets 700,000 570,000
    Plant & equipment, net 860,000 920,000
    Total Assets $1,560,000 $1,490,000

    LIABILITIES & EQUITIES
    Accounts payable $200,000 $170,000
    Accrued payable 80,000 80,000
    Notes payable, current 40,000 40,000
    Total current liabilities 320,000 290,000
    Bonds payable 210,000 220,000
    Total liabilities 530,000 510,000

    Preferred stock, $100 par value, 5% 100,000 100,000
    Common stock, $1 par value 100,000 100,000
    Additional paid in capital, common stock 150,000 150,000
    Retained earnings 680,000 630,000
    Total equities 1,030,000 980,000
    Total liabilities & equities $1,560,000 $1,490,000

    INCOME STATEMENT
    2006
    Sales $1,220,000
    Cost of goods sold 790,000
    Gross margin 430,000
    Selling & Admin expense 268,000
    Net operating income 162,000
    Interest expense 26,000
    Income before tax 136,000
    Income tax 41,000
    Net income 95,000
    Dividends paid, preferred 5,000
    Net income for common shareholders 90,000
    Dividends paid, common 40,000
    Net income added to retained earnings 50,000
    Beginning retained earnings 630,000
    Ending retained earnings $680,000
    Other:
    Market value of stock end of year $12.87
    Tax rate 30%
    Bond interest 10%
    Return demanded on preferred stock 10%
    Return demanded on common stock 14%

    Required compute the following for 2006 :
    a. Gross margin percentage.
    b. Earnings per share (of common stock).
    c. Price-earnings ratio.
    d. Dividend payout ratio.
    dividend per share
    dividend payout ratio
    e. Dividend yield ratio.
    f. Return on total assets.
    after tax cost of interest
    average total assets
    return on total assets
    g. Return on common stockholders' equity.
    average stockholders equity
    average preferred stock
    return on equity
    h. Book value per share.
    i. Working capital.
    j. Current ratio.
    k. Acid-test ratio.
    l. Accounts receivable turnover.
    m. Average collection period (days).
    n. Inventory turnover.
    o. Average sale period (days).
    p. Times interest earned.
    q. Debt-to-equity ratio. 
    r. Show that financial leverage is positive or negative.

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    Required compute the following for 2006 :
    a. Gross margin percentage.
    Gross Income/Sales

    b. Earnings per share (of common stock).
    (Net Income for common shareholders/Number of Common shareholders)

    c. Price-earnings ratio.
    Price of ...

    Solution Summary

    Response helps in computing Earnings per share (of common stock).

    $2.19

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