Answer:
Earning per share = 2.166
Price earning = 10.15
Times interest earned = 5.4
Explanation:
Common stock outstanding at end = Shares outstanding (open) +Shares issued.
= 50000+10000= 60000 outstanding shares (at end)
a.)we know that earning per share =<u> net income - preference dividend</u>
Common shares outstanding at end
= ( N#1) <u>135000 - 5000</u>
60000
= 2.166 earning per share
(N#1):To calculate net income we will need statement of changes in equity,Suppose par value of shares = $10,
we have Beginning equity + net income - Dividend = Equity (end)
Net Income = 600000+35000-500000
Net income = 135000
b.) Price earning = <u>Market value per share </u> = <u>22 </u> = 10.15
Earning per share 2.166
c.) Times interest earned =<u> Income before interest and taxes</u> or EBIT
Interest expense
EBIT = 135000
= 135000 / 25000 = 5.4 times
