Hasseldine, Inc., had $ 1,600,000 in net income for 2010 after deducting interest expense of $ 320,000 and income taxes of $ 500,000. The price of the stock at the fiscal year- end was $ 35. The company’s shareholders’ equity follows:
Preferred stock, 6 percent, $ 10 par value, authorized 200,000 shares,
50,000 shares issued and outstanding .............. 500,000
Common stock, $ 5 par value, authorized 1,000,000 shares,
700,000 shares issued and outstanding ............ $ 3,500,000
Paid-in capital in excess of par, common stock ........... 900,000
Total contributed capital ................... $ 4,900,000
Retained earnings ....................... 1,754,000
Total shareholders’ equity ................... $ 6,654,000
A. Determine the times interest earned.
B. Compute the earnings per share.
C. Calculate the return on common equity.
D. Determine the price- earnings ratio at the fiscal year- end.