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Assignment 2

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6 views

Assignment 2

Uploaded by

Hajraa
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© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Assignment-2 Investor Ratios Fall-2024

Q-1 A Company shows the following condensed income statement information for the current year:

Revenue from sales $ 4,350,000


Cost of products sold (1,950,000)
Gross profit 2,400,000
Operating expenses:
Selling expenses $520,000
General expenses 375,000 (895,000)
Operating income 1,505,000
Other income 35,000
Interest (175,000)
Operating income before income taxes 1,365,000
Taxes related to operations (450,000)
Income from operations 915,000
Extraordinary gain 45,000
Income before minority interest 960,000
Minority share of earnings (70,000)
Net income $ 890,000

Required Calculate the degree of financial leverage.

Q -2 2024 2023 2022


Earnings per share $1.12 $1.20 $1.27
Cash dividends per share (common) $0.90 $0.85 $0.82
Market price per share $18.10 $16.30 $14.50
Total common dividends $21,700,000 $19,500,000 $18,360,000
Shares outstanding, end of year 24,280,000 23,100,000 22,500,000
Total assets $1,280,100,000 $1,267,200,000 $1,260,400,000
Total liabilities $800,400,000 $808,500,000 $799,200,000
Nonredeemable preferred stock $15,300,000 $15,300,000 $15,300,000
Preferred dividends $910,000 $910,000 $910,000
Net income $31,200,000 $30,600,000 $29,800,000

Required a. Based on these data, compute the following for 2024, 2023, and 2022:
1. Percentage of earnings retained
2. Price/earnings ratio
3. Dividend payout
4. Dividend yield
5. Book value per share
b. Discuss your findings from the viewpoint of a potential investor.

Financial Analysis UCP-Business School

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