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3 years ago

Here is the income statement for Larkspur, Inc.

Business

1 answer:

adoni [48]3 years ago

5 0

Answer:

a. The Earnings per share is $3.87

b. The Price-earnings ratio is 3.87 times

c. The Payout ratio is 12.21%

d. The Times interest earned is 10.32

Explanation:

a. The Earnings per share would be calculated as follows:

Earnings per share = (Net income – Preferred stock dividend)/Average number of common shares outstanding

We need to use the formula of the Weighted Average number of common shares outstanding to calculate the Preferred stock dividend.

Therefore, Weighted Average number of common shares outstanding = (Number of common shares outstanding in the beginning + Number of common shares outstanding in the end)/2

= (27,600 + 36,700)/2

= 32,150

Preferred stock dividend = $6,700

Therefore, Earnings per share= (131,100 – 6,700)/32,150

= 124,400/42,150

= $3.87

b. The Price-earnings ratio would be calculated as follows:

Price - earning ratio = Market price per share / Earning per share

= $15 / $3.87 = 3.87 times

c. The Payout ratio would be calculated as follows:

Payout ratio = (Total cash dividends - Preferred stock dividends) / Net income

= ($22,700 - $6,700) / $131,000 = 12.21 %

d. Times interest earned would be calculated as follows:

Times interest earned = (Net income + Interest expense + Tax expense)/Interest expense

= (131,100 + 16,700 + 24,600)/16,700

= 10.32 times

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Answer:

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Amsted, Inc. is considering a project that will increase revenues by $2.5 million, cash operating expenses by $700,000, and depr

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Answer:

incremental after tax cash flow for 2011: $1,145,000

Explanation:

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3 years ago

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4 years ago

During May, Bergen Company accumulated 2,500 hours of direct labor costs on job 200 and 3,000 labor hours on job 305. The total

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Answer:

a. $7.75 per direct labor hour.

b. Job 200 = $19,375 and Job 305 = $23,250

c. Journal

Work In Process : Job 200 $19,375 (debit)

Work In Process : Job 200 $23,250 (debit)

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Explanation:

Predetermined factory overhead rate = Budgeted Fixed Costs ÷ Estimated Direct Labor Hours

= $620,000 ÷ 80,000

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Job 200 = Actual Labor hours × Predetermined factory overhead rate

= 2,500 hours × $7.75

= $19,375

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= 3,000 hours × $7.75

= $23,250

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3 years ago