Chap 16 Practice answers

Chap 16 Practice answers - Lesmerises Corporation's most...

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Unformatted text preview: Lesmerises Corporation's most recent balance sheet and income statement appear below: Dividends on common stock during Year 2 totaled $40 thousand. Dividends on preferred stock totaled $10 thousand. The market price of common stock at the end of Year 2 was $2.85 per share. Garrison - Chapter 016 12. The gross margin percentage for Year 2 is closest to: A. 53.4% B. 671.4% C. 34.8% D. 14.9% Gross margin percentage = Gross margin Sales = $470 $1,350 = 34.8% 13. The earnings per share of common stock for Year 2 is closest to: A. $0.69 B. $0.35 C. $0.30 D. $0.50 Earnings per share = (Net income - Preferred dividends) Average number of common shares outstanding = ($70 - $10) 200* = $60 200* = $0.30 * Number of common shares outstanding = Common stock Par value per share = $200 $1 = 200 shares outstanding (this is the average number of shares outstanding throughout the year given that the common stock account balance is the same on both dates) 14. The price-earnings ratio for Year 2 is closest to: A. 5.70 B. 8.14 C. 4.13 D. 9.50 Price-earnings ratio = Market price per share Earnings per share = $2.85 $0.30* = 9.5 * Earnings per share = (Net income - Preferred dividends) Average number of common shares outstanding = ($70 - $10) 200** = $60 200** = $0.30 ** Number of common shares outstanding = Common stock Par value per share = $200...
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This note was uploaded on 01/13/2012 for the course IS 3020 taught by Professor Staff during the Spring '08 term at Kennesaw.

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Chap 16 Practice answers - Lesmerises Corporation's most...

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