|
Recent financial statements for Madison Company follow: |
| Madison Company Balance Sheet June 30 |
||||||
| Assets | ||||||
| Current assets: | ||||||
| Cash | $ | 24,000 | ||||
| Accounts receivable, net | 260,000 | |||||
| Merchandise inventory | 380,000 | |||||
| Prepaid expenses | 8,000 | |||||
|
|
|
|
||||
| Total current assets | 672,000 | |||||
| Plant and equipment, net | 820,000 | |||||
|
|
|
|
||||
| Total assets | $ | 1,492,000 | ||||
|
|
|
|
||||
| Liabilities and Stockholders’ Equity | ||||||
| Liabilities: | ||||||
| Current liabilities | $ | 270,000 | ||||
| Bonds payable, 8% | 360,000 | |||||
|
|
|
|
||||
| Total liabilities | 630,000 | |||||
| Stockholders’ equity: | ||||||
| Common stock, $5 par value | $ | 150,000 | ||||
| Retained earnings | 712,000 | |||||
|
|
|
|
||||
| Total stockholders’ equity | 862,000 | |||||
|
|
|
|
||||
| Total liabilities and stockholders’ equity | $ | 1,492,000 | ||||
|
|
|
|
||||
|
|
||||||
| Madison Company Income Statement For the Year Ended June 30 |
|||
| Sales | $ | 2,290,000 | |
| Cost of goods sold | 1,170,000 | ||
|
|
|
|
|
| Gross margin | 1,120,000 | ||
| Selling and administrative expenses | 580,000 | ||
|
|
|
|
|
| Net operating income | 540,000 | ||
| Interest expense | 28,800 | ||
|
|
|
|
|
| Net income before taxes | 511,200 | ||
| Income taxes | 153,360 | ||
|
|
|
|
|
| Net income | $ | 357,840 | |
|
|
|
|
|
|
|
|||
|
Account balances at the beginning of the company’s fiscal year were: accounts receivable, $190,000; and inventory, $280,000. All sales were on account. |
|
Assume that Madison Company paid dividends of $3.35 per share during the year. Also assume that the company’s common stock had a market price of $73.00 per share on June 30 and that there was no change in the number of outstanding shares of common stock during the fiscal year. |
| Required: |
| Compute the following: |
| 1. |
Earnings per share. (Round your answer to 2 decimal places. Omit the “$” sign in your response.) |
| Earnings per share | $ |
| 2. |
Dividend payout ratio. (Round your intermediate calculations to 2 decimal places and final answer to 1 decimal place.Omit the “%” sign in your response.) |
| Dividend payout ratio | % |
| 3. | Dividend yield ratio. (Round your answer to 1 decimal place.Omit the “%” sign in your response.) |
| Dividend yield ratio | % |
| 4. |
Price earnings ratio. (Round your intermediate calculations to 2 decimal places and final answer to 1 decimal place.) |
| Price earnings ratio |