Question: Compute selected ratios. Compute the following measures for 2014. (a) Earnings per share. (b) Price-earnings ratio. (c) Payout ratio. (d) Times interest earned. EBERLE, INC.

Compute selected ratios.

Compute the following measures for 2014.

  • (a) Earnings per share.
  • (b) Price-earnings ratio.
  • (c) Payout ratio.
  • (d) Times interest earned.

EBERLE, INC.

Income Statement

For the Year Ended December 31, 2014

Sales revenue

$400,000

Cost of goods sold

230,000

Gross profit

170,000

Expenses (including $16,000 interest and $24,000 income taxes)

98,000

Net income

$ 72,000

1. Common stock outstanding January 1, 2014, was 32,000 shares, and 40,000 shares were outstanding at December 31, 2014.

2. The market price of Eberle, Inc., stock was $14 in 2014.

3. Cash dividends of $21,000 were paid, $5,000 of which were to preferred stockholders

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