Here is the income statement for eberle, inc. eberle, inc. income statement for the year ended december 31, 2014 sales revenue $423,100 cost of goods sold 224,200 gross profit 198,900 expenses (including $13,400 interest and $21,900 income taxes) 70,600 net income $ 128,300 additional information: 1. common stock outstanding january 1, 2014, was 26,300 shares, and 37,700 shares were outstanding at december 31, 2014. 2. the market price of eberle, inc., stock was $15 in 2014. 3. cash dividends of $22,700 were paid, $3,500 of which were to preferred stockholders. compute the following measures for 2014. (round all answers to 2 decimal places, e. g. 1.83 or 2.51%) (a) earnings per share $ (b) price-earnings ratio times (c) payout ratio % (d) times interest earned times

(A) $3.9

(B) 3.84 times

(C)  $0.71

(D)  9.57 times

Explanation:

(A).  The computation of earning per share is shown below:

= (Net income - preference dividend) ÷ (average of outstanding shares)

where,  

Average of outstanding shares = (Beginning balance of outstanding shares + ending balance of outstanding shares) ÷ 2

The other items value will remain the same  

Now put these values to the above formula  

So, the value would equal to

= ($128,300 - $3,500) ÷ {(26,300 shares +37,700 shares ) ÷ 2}

=  $124,800 ÷ 32,000 shares

= $3.9

(B). The computation of price earning ratio is shown below:

= Market price of stock ÷ Earning per share

= $15 ÷ $3.9

= 3.84 times

(C). The computation of the payout ratio is shown below:

= Dividend per share ÷ Earning per share

where,

Dividend per share = (Annual dividend ÷ average number of outstanding shares)

= $22,700 ÷ {(26,300 shares +37,700 shares ) ÷ 2}

= $22,700  ÷ 32,000 shares

= $0.71

(D) The computation of times interest earned is shown below:

= Earning before interest and tax ÷ interest expense

= $128,300 ÷ $13,400

= 9.57 times

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