Problem:
The income statement for Christensen, Inc., appears below.
CHRISTENSEN, INC.
Income Statement
For the Year Ended December 31, 2011
Sales: $401,100
Cost of goods sold: 228,100
Gross profit: 173,000
Expenses (including $15,000 interest and $25,000 income taxes): 102,300
Net income: $70,700
Additional information:
1. The weighted average common shares outstanding in 2011 were 30,000 shares.
2. The market price of Christensen, Inc. stock was $12 in 2011.
3. Cash dividends of $21,700 were paid, $5,030 of which were to preferred stockholders. Compute the following ratios for 2011.
(a) Earnings per share
(b) Price-earnings
(c) Payout
(d) Times interest earned