Determine number of times bond interest charges are earned

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Problem - Six measures of solvency or profitability - The balance sheet for Kronos Inc. at the end of the current fiscal year indicated the following:

Bonds payable, 10% (issued in 2002, due in 2022) $3,750,000

Preferred $4 stock, $40 par 2,000,000

Common stock, $10 par 3,600,000

Income before income tax was $2,400,000, and income taxes were $400,000 for the current year. Cash dividends paid on common stock during the current year totaled $720,000. The common stock was selling for $72 per share at the end of the year. Determine each of the following:

(a) number of times bond interest charges are earned. Round to one decimal place except earnings per share, which should be rounded to two decimal places.

(b) number of times preferred dividends are earned. Round to one decimal place except earnings per share, which should be rounded to two decimal places.

(c) earnings per share on common stock. Round to one decimal place except earnings per share, which should be rounded to two decimal places.

(d) price-earnings ratio. Round to one decimal place except earnings per share, which should be rounded to two decimal places.

(e) dividends per share of common stock. Round to one decimal place except earnings per share, which should be rounded to two decimal places.

(f) dividend yield. Round to one decimal place except earnings per share, which should be rounded to two decimal places.

Reference no: EM132684345

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