Calculate the earnings per share

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Reference no: EM133185129

Question - Carla Vista Medical manufactures hospital beds and other institutional furniture. The company's comparative balance sheet and income statement for 2019 and 2020 follow.

Carla Vista Medical
Comparative Balance Sheet
As of December 31


2020

2019

Assets



Current assets



Cash

$395,000

$417,400

Accounts receivable, net

1,054,000

776,500

Inventory

728,000

681,100

Other current assets

381,300

247,100

Total current assets

2,558,300

2,122,100

Property, plant, & equipment, net

8,662,070

8,439,780

Total assets

$11,220,370

$10,561,880




Liabilities and Stockholders' Equity



Current liabilities

$3,160,000

$2,846,000

Long-term debt

3,702,600

3,892,700

Total liabilities

6,862,600

6,738,700

Preferred stock, $5 par value

59,000

58,900

Common stock, $0.25 par value

104,650

103,850

Retained earnings

4,194,120

3,660,430

Total stockholders' equity

4,357,770

3,823,180

Total liabilities and stockholders' equity

$11,220,370

$10,561,880

 

Carla Vista Medical
Comparative Income Statement and Statement of Retained Earnings
For the Year


2020

2019

Sales revenue (all on account)

$10,177,300

$9,613,900

Cost of goods sold

5,613,000

5,298,700

Gross profit

4,564,300

4,315,200

Operating expenses

2,840,200

2,634,200

Net operating income

1,724,100

1,681,000

Interest expense

300,400

308,600

Net income before taxes

1,423,700

1,372,400

Income taxes (30%)

427,110

411,720

Net income

$996,590

$960,680

Dividends paid



Preferred dividends

29,550

29,550

Common dividends

433,350

413,000

Total dividends paid

462,900

442,550

Net income retained

533,690

518,130

Retained earnings, beginning of year

3,660,430

3,142,300

Retained earnings, end of year

$4,194,120

$3,660,430

Required -

(a) Calculate the earnings per share (average of 422,000 shares outstanding for the year) for 2020.

(b) Calculate the price/earnings ratio (market price of $48 at year-end) for 2020.

(c) Calculate the dividend payout ratio (dividends of $1.25 per common share for the year) for 2020.

Reference no: EM133185129

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