Question: The balance sheet for Garcon Inc. at the end of the current fiscal year indicated the following: Bonds payable, 8% (issued in 2004, due in
The balance sheet for Garcon Inc. at the end of the current fiscal year indicated the following:
Bonds payable, 8% (issued in 2004, due in 2024) ... $5,000,000
Preferred $4 stock, $50 par............ 2,500,000
Common stock, $10 par .............. 5,000,000
Income before income tax was $3,000,000, and income taxes were $1,200,000 for the current year. Cash dividends paid on common stock during the current year totaled $1,200,000. The common stock was selling for $32 per share at the end of the year. Determine each of the following:
(a) Number of times bond interest charges are earned,
(b) Number of times preferred dividends are earned,
(c) Earnings per share on common stock,
(d) Price-earnings ratio,
(e) Dividends per share of common stock.
(f) Dividend yield. Round to one decimal place, except earnings per share, which should be rounded to two decimal places.
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