Compute the following ratios for 2007


The income statement for the OverUnder Company for the year ended December 31, 2007, appears below.


Sales 670,000
Costs of goods sold 390,000
Gross profit 280,000
Expenses 180,000*
Net income $100,000


*Includes $25,000 of interest expense and $20,000 of income tax expense.

Additional information:
a. Common stock outstanding on January 1, 2007, was 50,000 shares. On July 1, 2007, 10,000 more shares were issued.
b. The market price of OverUnder's stock was $18 at the end of 2007.
c. Cash dividends of $35,000 were paid, $5,000 of which were paid to preferred stockholders.

Part 1:
Compute the following ratios for 2007 (show your work):
a. Earnings per share.
b. Price-earnings.
c. Times interest earned.

Part 2:

Please explain the meaning of these ratios and the results you have calculated.

 

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Accounting Basics: Compute the following ratios for 2007
Reference No:- TGS071838

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