Reference no: EM131580372

Question - Six Measures of Solvency or Profitability

The balance sheet for Garcon Inc. at the end of the current fiscal year indicated the following:

Bonds payable, 8% (issued in 2006, due in 2026) - $5,000,000

Preferred $4 stock, $50 par - 2,500,000

Common stock, $10 par - 5,000,000

Income before Income tax was $3,000,000, and Income taxes were $1,200,000 for the current year. Cash dividends paid on common stock during the current year totaled $1,200,000. The common stock was selling for $32 per share at the end of the year.

Determine each of the following. Round to one decimal place, expect for dollar amounts which should be rounded to the nearest whole cent. Use the rounded answers for subsequent requirement, if required.

a. Number of times bond interest charges are earned

b. Number of times preferred dividends are earned

c. Earnings per share on common stock

d. Price-earnings ratio

e. Dividends per share of common stock

f. Dividend yield