Temple Corp. earned net income of $128,500 and paid the minimum dividend to preferred stockholders for 2016. Assume that there are no changes in common shares outstanding. Temple’s books include the following figures:
Preferred Stock—5%, $40 Par Value; 2,000 shares authorized, 1,000 shares
issued and outstanding.............$ 40,000
Common Stock—$10 Par Value; 70,000 shares authorized, 52,000 shares issued, 50,600 shares outstanding................. 520,000
Paid-In Capital in Excess of Par—Common....... 490,000
Treasury Stock—Common; 1,400 shares at cost...... (28,000)
Requirements
1. Compute Temple’s EPS for the year.
2. Assume Temple’s market price of a share of common stock is $8 per share. Compute Temple’s price/earnings ratio.