Problem - The income statement for XYZ for the year ended December 31, 2016, appears below.
|
Sales
|
$900,000
|
|
Cost of goods sold
|
600,000
|
|
Gross margin
|
300,000
|
|
Expenses
|
160,000*
|
|
Net income
|
$ 140,000
|
*Includes $40,000 of interest expense and $30,000 of income tax expense.
Additional information:
1. Common stock outstanding during 206 totaled 60,000 shares.
2. The market price of Ray's stock was $20 at the end of 2016.
3. Cash dividends of $20,000 were paid, $5,000 of which were paid to preferred stockholders.
Required: Compute the following ratios for 2016:
A. earnings per share.
B. price-earnings.
C. times-interest-earned ratio.