Question

Instructions: Compute the following ratios for 2017: a) Earnings per share, b) Price-earnings ratio, c) Payout ratio, d) Times interest earned. Income statement for Christiansen, AJS, appears below.

CHRISTIANSEN, AJS

Income Statement

For the Year Ended December 31, 2017

Net sales …………………………………………………………………………………..

€ 400,000

Cost of goods sold …………………………………………………………………….

235,000

Gross profit ………………………………………………………………………………

165,000

Expenses (including €14,000 interest and €17,000 income taxes) ….

105,000

Net income ……………………………………………………………………………….

€ 60,000

Additional information:

The weighted-average ordinary shares outstanding in 2017 were 32,000 shares.

The market price of Christiansen, AJS was €10.80 per share in 2017.

Cash dividends of €20,000 were paid, €5.000 of which were to preference shareholders.

Instructions: Compute the following ratios for 2017: a) Earnings per share, b) Price-earnings ratio, c) Payout ratio,

                       d) Times interest earned.

RATIOS:

a) Earnings per share.Show your computations

b) Price-earnings ratio.Show your computations

c) Payout ratio.Show your computations

d)   Times interest earned.Show your computations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     

 

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