Missing information:
(a) Earnings per share s (b) Price-earnings ratio (c) Payout ratio times (d) Times interest earned times
Answer:
a) Earnings per share = $2.64
(b) Price-earnings ratio = 5.3
(c) Payout ratio times (you can calculate 3 payout ratios, the third type which is cash dividend payout ratio cannot be calculated because there is not enough information):
- total payout ratio = 26.44%
- common stockholders' payout ratio = 22.03%
(d) Times interest earned times = 7.77
Explanation:
earnings per share (EPS) = (net income - preferred stock dividends) / average outstanding common shares
- net income = $86,600
- preferred dividends = $4,900
- average outstanding common stocks = (24,700 + 37,100) / 2 = 30,900
EPS = ($86,600 - $4,900) / 30,900 = $2.64
price earnings ratio = market price per share / earnings per share = $14 / $2.64 = 5.3
2 ways to calculate payout ratio times:
- total dividends / net Income = $22,900 / $86,600 = 26.44%
- or common stockholders payout ratio = ($22,900 - $4,900) / ($86,600 - $4,900) = $18,000 / $81,700 = 22.03%
times interest earned = EBIT / interest expense
EBIT = net income + interest expense + income taxes = $86,600 + $16,700 + $26,400 = $129,700
times interest earned = $129,700 / $16,700 = 7.77
