Compute the price-earnings ratio and payout ratio

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Question - The income statement for Sutherland, Inc., appears below.

SUTHERLAND, INC. Income Statement For the Year Ended December 31. 2017

Net sales

$408,000

Cost of goods sold

218,000

Gross profit

190,000

Expenses (including 512,500 interest and $21,500 income taxes)

84,000

Net income

$106,000

Additional information:

1. The weighted-average common shares outstanding in 2017 were 25,000 shares.

2. The market price of Sutherland, Inc. stock was $10 in 2017.

3. Cash dividends of $30,000 were paid, $6,000 of which were to preferred stockholders.

Compute the following ratios for 2017.

 (a) Earnings per share

(b) Price-earnings ratio times

(c) Payout ratio

(d) Times interest earned

Reference no: EM131817291

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