Rossdale, Inc., had additions to retained earnings for the year just ended of $630,000. The firm paid out $105,000 in cash dividends, and it has ending total equity of $7.25 million. Requirement 1: If the company currently has 620,000 shares of common stock outstanding, what are earnings per share? Dividends per share? What is book value per share? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).) Earnings per share $ Dividends per share $ Book value per share $ Requirement 2: If the stock currently sells for $29.50 per share, what is the market-to-book ratio? The price-earnings ratio? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).) Market-to-book ratio times Price-earnings ratio times Requirement 3: If total sales were $10.55 million, what is the price-sales ratio? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) Price-sales ratio times Explanation: 1. We need to calculate the net income before we calculate the earnings per share. The sum of dividends and addition to retained earnings must equal net income, so net income must have been: Net income = Addition to retained earnings + Dividends Net income = $630,000 + 105,000 Net income = $735,000 So, the earnings per share were: EPS = Net income / Shares outstanding EPS = $735,000 / 620,000 EPS = $1.19 per share The dividends per share were: Dividends per share = Total dividends / Shares outstanding Dividends per share = $105,000 / 620,000 Dividends per share = $.17 per share The book value per share was: Book value per share = Total equity / Shares outstanding Book value per share = $7,250,000 / 620,000 Book value per share = $11.69 per share 2. The market-to-book ratio is: Market-to-book ratio = Share price / Book value per share Market-to-book ratio = $29.50 / $11.69 Market-to-book ratio = 2.52 times The P/E ratio is: P/E ratio = Share price / EPS P/E ratio = $29.50 / $1.19 P/E ratio = 24.88 times 3. Sales per share are: Sales per share = Total sales / Shares outstanding Sales per share = $10,550,000 / 620,000 Sales per share = $17.02 The P/S ratio is: P/S ratio = Share price / Sales per share P/S ratio = $29.50 / $17.02 P/S ratio = 1.73 times

Rossdale, Inc., had additions to retained earnings for the year just ended of $630,000. The firm paid out $105,000 in cash dividends, and it has ending total equity of $7.25 million.

Requirement 1:

If the company currently has 620,000 shares of common stock outstanding, what are earnings per share? Dividends per share? What is book value per share? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)

Earnings per share	$
Dividends per share	$
Book value per share	$

Requirement 2:

If the stock currently sells for $29.50 per share, what is the market-to-book ratio? The price-earnings ratio? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)

Market-to-book ratio	times
Price-earnings ratio	times

Requirement 3:

If total sales were $10.55 million, what is the price-sales ratio? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Price-sales ratio

times

Explanation:

1.

We need to calculate the net income before we calculate the earnings per share. The sum of dividends and addition to retained earnings must equal net income, so net income must have been:

Net income	=	Addition to retained earnings + Dividends
Net income	=	$630,000 + 105,000
Net income	=	$735,000

So, the earnings per share were:

EPS	=	Net income / Shares outstanding
EPS	=	$735,000 / 620,000
EPS	=	$1.19 per share

The dividends per share were:

Dividends per share	=	Total dividends / Shares outstanding
Dividends per share	=	$105,000 / 620,000
Dividends per share	=	$.17 per share

The book value per share was:

Book value per share	=	Total equity / Shares outstanding
Book value per share	=	$7,250,000 / 620,000
Book value per share	=	$11.69 per share

2.

The market-to-book ratio is:

Market-to-book ratio	=	Share price / Book value per share
Market-to-book ratio	=	$29.50 / $11.69
Market-to-book ratio	=	2.52 times

The P/E ratio is:

P/E ratio	=	Share price / EPS
P/E ratio	=	$29.50 / $1.19
P/E ratio	=	24.88 times

3.

Sales per share are:

Sales per share	=	Total sales / Shares outstanding
Sales per share	=	$10,550,000 / 620,000
Sales per share	=	$17.02

The P/S ratio is:

P/S ratio	=	Share price / Sales per share
P/S ratio	=	$29.50 / $17.02
P/S ratio	=	1.73 times