Question

Exercise 13-10 Financial Ratios for Assessing Market Performance [LO13-6] The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December 31 Assets Current assets: Cash $ 21,000 Accounts receivable, net 240,000 Merchandise inventory 370,000 Prepaid expenses 8,000 Total current assets 639,000 Property and equipment, net 880,000 Total assets $ 1,519,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities $ 280,000 Bonds payable, 11% 350,000 Total liabilities 630,000 Stockholders’ equity: Common stock, $10 par value $ 180,000 Retained earnings 709,000 Total stockholders’ equity 889,000 Total liabilities and equity $ 1,519,000 Castile Products, Inc. Income Statement For the Year Ended December 31 Sales $ 2,280,000 Cost of goods sold 1,230,000 Gross margin 1,050,000 Selling and administrative expenses 570,000 Net operating income 480,000 Interest expense 38,500 Net income before taxes 441,500 Income taxes (30%) 132,450 Net income $ 309,050 Account balances at the beginning of the year were: accounts receivable, $210,000; and inventory, $300,000. All sales were on account. Assume that Castile Products, Inc., paid dividends of $2.75 per share during the year. Also assume that the company’s common stock had a market price of $57 at the end of the year and there was no change in the number of outstanding shares of common stock during the year. Required: Compute financial ratios as follows: 1. Earnings per share. (Round your answer to 2 decimal places.) 2. Dividend payout ratio. (Round your intermediate calculations to 2 decimal places. Round your final percentage answer to 1 decimal place (i.e., 0.1234 should be considered as 12.3%).) 3. Dividend yield ratio. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be considered as 12.3%).) 4. Price-earnings ratio. (Round your intermediate calculations to 2 decimal places and final answer to 1 decimal place.) 5. Book value per share. (Round your answer to 2 decimal places.)