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Five Measures of Solvency or Profitability The balance sheet for bearing Industries Inc at the end of the current fiscal year indicated the following: Bonds payable, 10% $1,100,000 Preferred $5 stock, $100 par 486,000 Common stock, $11 par 1,871,100 Income before income tax was $429,000, and income taxes were $64,500, for the current year. Cash dividends paid on common stock during the current year totaled $81,648. The common stock was seting for $16 per share at the end of the year Determine each of the following. Round answers to one decimal place, except for dollar amounts which should be rounded to the nearest whole cent. Use the rounded answers for subsequent requirements, if required. a. Times interest eamed ratio b. Earnings per share on common stock Price-earnings ratio d. Dividends per share of common stock Dividend yield times Owa My W & Divide the sum of income before income tes plus interest expense by interest expense interest equals the bond payable amount times the interest rate on the bonds Divide net income (which is income before taxas less income taxes) minus preferred dividends by common shares outstanding (common stock+par value) Divide common market share price (or seting price at the end of the year) by common eamings per share (from requirement) d Divide common dividends by common shares outstanding (common stock par value) Divide common dividends per share (rom requirement e) by share price (or selling price at the end of the year) Leaning Objective 4 and Leaming Objective 5

Five Measures of Solvency or Profitability The balance sheet for bearing Industries Inc at the end of the current fiscal year indicated the following: Bonds payable, 10% $1,100,000 Preferred $5 stock, $100 par 486,000 Common stock, $11 par 1,871,100 Income before income tax was $429,000, and income taxes were $64,500, for the current year. Cash dividends paid on common stock during the current year totaled $81,648. The common stock was seting for $16 per share at the end of the year Determine each of the following. Round answers to one decimal place, except for dollar amounts which should be rounded to the nearest whole cent. Use the rounded answers for subsequent requirements, if required. a. Times interest eamed ratio b. Earnings per share on common stock Price-earnings ratio d. Dividends per share of common stock Dividend yield times Owa My W & Divide the sum of income before income tes plus interest expense by interest expense interest equals the bond payable amount times the interest rate on the bonds Divide net income (which is income before taxas less income taxes) minus preferred dividends by common shares outstanding (common stock+par value) Divide common market share price (or seting price at the end of the year) by common eamings per share (from requirement) d Divide common dividends by common shares outstanding (common stock par value) Divide common dividends per share (rom requirement e) by share price (or selling price at the end of the year) Leaning Objective 4 and Leaming Objective 5

Financial Accounting
Financial Accounting
15th Edition
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter17: Financial Statement Analysis
Section: Chapter Questions
Problem 20E: Five measures of solvency or profitability The balance sheet for Garcon Inc. at the end of the...
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Five Measures of Solvency or Profitability The balance sheet for Bearing Industries Inc at the end of the current fiscal year indicated the following: Bonds payable, 10% Preferred $5 stock, $100 par $1,100,000 456,000 1,871,100 Common stock, $11 par Income before income tax was $429,000, and income taxes were $64,500, for the current year. Cash dividends paid on common stock during the current year totaled $81,648. The common stock was selling for $16 per share at the end of the year Determine each of the following. Round answers to one decimal place, except for dollar amounts which should be rounded to the nearest whole cent. Use the rounded answers for subsequent requirements, if required. a. Times interest eamed ratio Earnings per share on common stock cPrice-earnings ratio d. Dividends per share of common stock Dividend yield times Check My & Divide the sum of income before income tax plus interest expense by interest expense interest equals the bond payable amount times the interest rate on the bonds b. Divide net income (which is income before taxes less income taxes) minus preferred dividends by common shares outstanding (common stock + par value) Divide common market share price (or selling price at the end of the year) thy common eamings per share (from requirement). d Divide common dividends by common shares outstanding (common stock+par value) Divide common dividends per share from requirement e) by share price (or selling price at the end of the year) Lang Objective and Leaming Objective 5
Transcribed Image Text:Five Measures of Solvency or Profitability The balance sheet for Bearing Industries Inc at the end of the current fiscal year indicated the following: Bonds payable, 10% Preferred $5 stock, $100 par $1,100,000 456,000 1,871,100 Common stock, $11 par Income before income tax was $429,000, and income taxes were $64,500, for the current year. Cash dividends paid on common stock during the current year totaled $81,648. The common stock was selling for $16 per share at the end of the year Determine each of the following. Round answers to one decimal place, except for dollar amounts which should be rounded to the nearest whole cent. Use the rounded answers for subsequent requirements, if required. a. Times interest eamed ratio Earnings per share on common stock cPrice-earnings ratio d. Dividends per share of common stock Dividend yield times Check My & Divide the sum of income before income tax plus interest expense by interest expense interest equals the bond payable amount times the interest rate on the bonds b. Divide net income (which is income before taxes less income taxes) minus preferred dividends by common shares outstanding (common stock + par value) Divide common market share price (or selling price at the end of the year) thy common eamings per share (from requirement). d Divide common dividends by common shares outstanding (common stock+par value) Divide common dividends per share from requirement e) by share price (or selling price at the end of the year) Lang Objective and Leaming Objective 5
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