Answer
EXERCISE 15–6 Financial Ratios for Assessing Market Performance
Solution:-
Weller Corporation
(dollars in thousands)
1. Earnings per share = \$4.43 per share
2. Price-earnings ratio = 4.06
3. Dividend payout ratio = 9.03%
4. Dividend yield ratio = 2.22%
5. Book value per share = $43.6 per share
Work Step by Step
$Working:- $
$ 1.\ Earnings\ per\ share = \frac{Net\ income}{Average\ number\ of\ common\ shares\ outstanding} = \frac{$3,540 }{ \frac{ 800+800}{2 } } = \frac{$3,540 }{ 800} = \$4.43\ per\ share\ (rounded) $
$ 2.\ Price-earnings\ ratio = \frac{Market\ price\ per\ share }{ Earnings\ per\ share} = \frac{$18 }{ $4.43 } = 4.06\ (rounded) $
$ 3.\ Dividend\ payout\ ratio = \frac{Dividends\ per\ share }{ Earnings\ per\ share} = \frac{$0.40 }{ $4.43 } = 9.03\%\ (rounded) $
$ 4.\ Dividend\ yield\ ratio = \frac{Dividends\ per\ share }{ Market\ price\ per\ share } = \frac{$0.40 }{ $18} = 2.22\%\ (rounded) $
$ 5.\ Book\ value\ per\ share = \frac{\ Total\ stockholders’\ equity }{ Number\ of\ common\ shares\ outstanding } = \frac{$34,880 }{ 800} =$ $ \$43.6\ per\ share\ (rounded) $
