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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
Carla Vista Medical Comparative Income Statement and Statement of Retained Earnings For the Year
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
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
3,142,300
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.
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