Question

Makers Corp. had additions to retained earnings for the year just ended of $261,000. The firm paid out $194,000 in cash dividends, and it has ending total equity of $4.99 million. The company currently has 130,000 shares of common stock outstanding.a. What are earnings per share?b. What are dividends per share?c. What is the book value per share?d. If the stock currently sells for $74 per share, what is the market-to-book ratio?

Answer 1

a. $3.5 per share

b. $1.49 per share

c. $38.38 per share

d. 1.93 times

Step-by-step explanation:

The computation is shown below:

a. Earning per share = (Net income) ÷ (Number of shares)

where,

Net income = Additions to retained earnings + cash dividends

= $261,000 + $194,000

= $455,000

So, the earning per share equal to

= $455,000 ÷ 130,000 shares

= $3.5 per share

b. Dividend per share = (Total dividend) ÷ (number of shares)

= ($194,000) ÷ (130,000 shares)

= $1.49 per share

c. Book value per share = (Total equity) ÷ (number of shares)

= ($4,990,000) ÷ (130,000 shares)

= $38.38 per share

d. Market to book ratio = (Market price per share) ÷ (book value per share)

= $74 ÷ $38.38

= 1.93 times