The companys common stock is currently selling for 4186 per

Assignment Help Accounting Basics

Reference no: EM13580915

Modern Building Supply sells various building materials to retail outlets. The company has just approached Linden State Bank requesting a $300,000 loan to strengthen the Cash account and to pay certain pressing short-term obligations. The company's financial statements for the most recent two years follow:

Modern Building Supply Comparative Balance Sheet
	This Year		Last Year
Assets
Current assets:
Cash	$	56,000	$	146,000
Marketable securities		0		12,000
Accounts receivable, net		470,000		281,000
Inventory		942,000		593,000
Prepaid expenses		18,000		27,000

Total current assets		1,486,000		1,059,000
Plant and equipment, net		1,604,316		1,457,748

Total assets	$	3,090,316	$	2,516,748

Liabilities and Stockholders' Equity
Liabilities:
Current liabilities	$	804,000	$	435,000
Bonds payable, 9%		604,000		604,000

Total liabilities		1,408,000		1,039,000

Stockholders' equity:
Preferred stock, $25 par, 8%		255,000		255,000
Common stock, $10 par		502,000		502,000
Retained earnings		925,316		720,748

Total stockholders' equity		1,682,316		1,477,748

Total liabilities and stockholder's equity	$	3,090,316	$	2,516,748

Modern Building Supply Comparative Income Statement and Reconciliation
	This Year		Last Year
Sales	$	5,020,000	$	4,355,000
Cost of goods sold		3,874,000		3,433,000

Gross margin		1,146,000		922,000
Selling and administrative expenses		634,000		537,000

Net operating income		512,000		385,000
Interest expense		54,360		54,360

Net income before taxes		457,640		330,640
Income taxes (30%)		137,292		99,192

Net income		320,348		231,448

Dividends paid:
Preferred dividends		20,400		20,400
Common dividends		95,380		75,300

Total dividends paid		115,780		95,700

Net income retained		204,568		135,748
Retained earnings, beginning of year		720,748		585,000

Retained earnings, end of year	$	925,316	$	720,748

During the past year, the company has expanded the number of lines that it carries in order to stimulate sales and increase profits. It has also moved aggressively to acquire new customers. Sales terms are 2/10, n/30. All sales are on account.

Assume that the following ratios are typical of companies in the building supply industry:


Current ratio	2.5
Acid-test ratio	1.2
Average collection period	18	days
Average sale period	50	days
Debt-to-equity ratio	0.75
Times interest earned ratio	6.0
Return on total assets	10	%
Price-earnings ratio	9

Assume that you have just inherited several hundred shares of Modern Building Supply stock. Not being acquainted with the company, you decide to do some analytical work before making a decision about whether to retain or sell the stock you have inherited.

Required:
1.	You decide first to assess the well-being of the common stockholders. For both this year and last year, compute the following:

a.	The earnings per share.(Round your answers to 2 decimal places.)

	This year	Last year
Earnings per share	$	$

b.	The dividend yield ratio for common stock. The company's common stock is currently selling for $41.86 per share; last year it sold for $31.92 per share. (Round your intermediate calculations to 2 decimal places and final answers to 1 decimal place.)

	This year	Last year
Dividend yield ratio	%	%

c.	The dividend payout ratio for common stock. (Round your intermediate calculations to 2 decimal places and final answers to 1 decimal place.)

	This year	Last year
Dividend payout ratio	%	%

d.	The price-earnings ratio. (Round your intermediate calculations to 2 decimal places and final answers to 1 decimal place.)

	This year	Last year
Price-earnings ratio	times	times

e.	The book value per share of common stock. (Round your answers to 2 decimal places.)

	This year	Last year
Book value per share	$	$
Im having a hard time figuring out the earnings per share without the treasury stock. I cant figure out the rest without the earnings per share. Please show me how to calculate without treasury stock.

Reference no: EM13580915

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