compute or determine the following for the years 2005 ndash 2009 642331

Consecutive five year balance sheets and income statements of Donna Szabo Corporation are shown below and on the following page.

Required

a. Compute or determine the following for the years 2005–2009:

1. Degree of financial leverage

2. Earnings per common share

3. Price/earnings ratio

4. Percentage of earnings retained

5. Dividend payout

6. Dividend yield

7. Book value per share

8. Materiality of options (use stock options outstanding)

b. Comment from the perspective of an investor.

Donna Szabo Corporation Balance Sheets December 31, 2005 through December 31, 2009
(Dollars in thousands)	2009	2008	2007	2006	2005
Assets
Current assets:
Cash	$26,000	$27,000	$29,000	$28,000	$27,000
Accounts receivable, net	125,000	126,000	128,000	130,000	128,000
Inventories	140,000	143,000	145,000	146,000	144,000
Total current assets	291,000	296,000	302,000	304,000	299,000
Property, plant, and equipment, net	420,000	418,000	417,000	418,000	415,000
Total assets	$711,000	$714,000	$719,000	$722,000	$714,000
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$120,000	$122,000	$122,500	$124,000	$125,000
Income taxes	12,000	13,000	13,500	13,000	12,000
Total current liabilities	132,000	135,000	136,000	137,000	137,000
Long term debt	90,000	65,000	67,000	68,000	69,000
Stockholders’ equity:
Preferred stock	49,000	76,000	80,000	82,000	75,000
Common stock	290,000	290,000	290,000	290,000	290,000
Paid in capital in excess of par, common stock	70,000	70,000	70,000	70,000	70,000
Retained earnings	80,000	78,000	76,000	75,000	73,000
Total stockholders’ equity	489,000	514,000	516,000	517,000	508,000
Total liabilities and stockholders’ equity	$711,000	$714,000	$719,000	$722,000	$714,000

Donna Szabo Corporation Statement of Earnings Years Ended December 31, 2005–2009
(In thousands, except per share)	2009	2008	2007	2006	2005
Net sales	$890,000	$870,000	$850,000	$935,000	$920,000
Cost of goods sold	540,000	530,700	522,750	579,000	570,000
Gross profit	350,000	339,300	327,250	356,000	350,000
Selling and administrative expense	230,000	225,000	220,000	225,000	224,000
Interest expense	9,500	6,600	6,800	6,900	7,000
Earnings from continuing operations before income taxes	110,500	107,700	100,450	124,100	119,000
Income taxes	33,000	33,300	32,100	30,400	37,400
Earnings from continuing operations	77,500	74,400	68,350	93,700	81,600
Extraordinary gains, net of taxes	20,000	—	—	—	—
Net earnings	$97,500	$74,400	$68,350	$93,700	$81,600
Earnings per share:
Continuing operations	$2.67	$2.57	$2.36	$3.23	$2.81
Extraordinary gain	0.69	—	—	—	—
Net earnings per share	$3.36	$2.57	$2.36	$3.23	$2.81

Note: Additional data:

1. Preferred stock dividends (in thousands):

2. Common shares outstanding, 29,000,000 (actual) (2005–2009)

3. Stock options outstanding, 1,000,000 (actual) (2005–2009)

4. Dividends per common share (actual):

5. Market price per common share (actual):