16 earnings per share eps eacs shares of common stock

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16) Earnings per share: EPS = EACS / # shares of common stock 17) Price-earnings ratio: what $1 in EPS is worth to an investor P/E = Common stock price / EPS $28 (given) / 18) Dividends per share: DPS = Dividend / share = total dividend / # shares of CS 19) Payout ratio: percent of EPS paid out as a dividend. POR = dividend per share / EPS 20) Plow-back ratio: percent of EPS retained PBR = 1 – Payout ratio Quiz 1: Builtrite had sales of $700,000 and COGS of $280,000. In addition, operating expenses were calculated at 25% of sales. Builtrite also received dividends of $40,000 and paid out common stock dividends of $25,000 to its stockholders. A long- term capital gain of $55,000 was realized during the year along with a capital loss of $70,000 1) What is Builtrite’s taxable income? $257,000 2) Based on their taxable income, what is Builtrite’s tax liability? $83,480 3) If we add to our problem that Builtrite also had $30,000 in interest expense, how much would this interest expense cost Builtrite after taxes? $18,300 4) If Builtrite had experienced a long-term capital loss of $50,000 (instead of the $70,000 long-term capital loss stated in the problem), and still had the $55,000 long-term capital gain stated in the problem, which of the following is correct: taxable income would increase by $5,000 (This problem is not related to the above problem) 5) Last year Builtrite had retained earnings of $140,000. This year, Builtrite had true net profits after taxes of $65,000 which includes common stock dividends received of $10,000, and also paid a preferred dividend of $15,000. What is Builtrite’s new level of retained earnings?

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