Effect of Financing on Earnings per Share Henriksen Co., which produces and sells biking equipment, is financed as follows: Bonds payable, 10% (issued at face amount) $1,800,000 Preferred $1 stock, $10 par 1,800,000 Common stock, $25 par 1,800,000 Income tax is estimated at 40% of income. Determine the earnings per share of common stock, assuming that the income before bond interest and income tax is (a) $576,000, (b) $756,000, and (c) $936,000. Enter answers in dollars and cents, rounding to two decimal places. a. Earnings per share on common stock $ b. Earnings per share on common stock c. Earnings per share on common stock $

Effect of Financing on Earnings per Share Henriksen Co., which produces and sells biking equipment, is financed as follows: Bonds payable, 10% (issued at face amount) $1,800,000 Preferred $1 stock, $10 par 1,800,000 Common stock, $25 par 1,800,000 Income tax is estimated at 40% of income. Determine the earnings per share of common stock, assuming that the income before bond interest and income tax is (a) $576,000, (b) $756,000, and (c) $936,000. Enter answers in dollars and cents, rounding to two decimal places. a. Earnings per share on common stock $ b. Earnings per share on common stock c. Earnings per share on common stock $

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Description: Effect of Financing on Earnings per ShareHenriksen Co., which produces and sells biking equipment, is financed as follows:Bonds payable, 10% (issued at face amount)$1,800,000Preferred $1 stock, $10 par1,800,000Common stock, $25 par1,800,000Income ta

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Effect of Financing on Earnings per Share Henriksen Co., which produces and sells biking equipment, is financed as follows: Bonds payable, 10% (issued at face amount) $650,000 Preferred $1 stock, $10 par 650,000 Common stock, $25 par 650,000 Income tax is estimated at 40% of income. Determine the earnings per share of common stock, assuming that the income before bond interest and income tax is (a) $253,500, (b) $318,500, and (c) $383,500. Enter answers in dollars and cents, rounding to two decimal places. a. Earnings per share on common stock $fill in the blank 1 b. Earnings per share on common stock $fill in the blank 2 c. Earnings per share on common stock $fill in the blank 3
Effect of Financing on Earnings per Share Henriksen Co., which produces and sells biking equipment, is financed as follows: Bonds payable, 10% (issued at face amount) $450,000 Preferred $1 stock, $10 par 450,000 Common stock, $25 par 450,000 Income tax is estimated at 40% of income. Determine the earnings per share of common stock, assuming that the income before bond interest and income tax is (a) $193,500, (b) $238,500, and (c) $283,500. Enter answers in dollars and cents, rounding to two decimal places. a. Earnings per share on common stock b. Earnings per share on common stock $ c. Earnings per share on common stock
1. SLM, Inc., with sales of $1,000, has the following balance sheet: SLM, Incorporated Balance Sheet as of 12/31/X0 Labilities and Equit Trade accounts payable Long-term debt Equity Assets Accounts receivable $ 200 Inventory 400 Plant 800 $1,400 $ 200 600 600 $1,400 It earns 10 percent on sales (after taxes) and pays no dividends. a. Determine the balance sheet entries for sales of $1,500 using the per- cent of sales method of forecasting. b. Will the firm need external financing to grow to sales of $1,500? e. Construct the new balance sheet and use newly issued long-term br to cover any financial deficiency, EXINC
Effect of Financing on Earnings per Share Henriksen Co., which produces and sells biking equipment, is financed as follows: Bonds payable, 10% (issued at face amount) $1,300,000 Preferred $2 stock, $20 par 1,300,000 Common stock, $25 par 1,300,000 Income tax is estimated at 40% of income. Determine the earnings per share of common stock, assuming that the income before bond interest and income tax is (a) $520,000, (b) $650,000, and (c) $780,000. Enter answers in dollars and cents, rounding to two decimal places. a. Earnings per share on common stock $ b. Earnings per share on common stock c. Earnings per share on common stock $
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Accounts Payable Notes Payable Long Term Debt Common Stock Retained Earnings Total Liabilities & Equity $ 275,000 $ 315,000 $ 495,000 $ 925,000 $2,450,000 $4,460,000 Pre-Tax Cost of Debt: Intermediate Debt: 4.5% Long Term Debt: 6.5% Tax Rate: 21% Return on Equity: 11% Dividends per share: $0.20 Earnings per share: $0.90 C/S market price: $55 C/S outstanding: 80000 shares This company uses intermediate debt, long-term debt and common equity to finance its operations. With the information presented above: a. Calculate the firm's debt ratio (book value and market value based) b. Calculate the firm's WACC c. Calculate the new firm's WACC if the firm issued 150,000 new common stock at a flotation cost of $1.20 per share. The new issuance generates $4.5 million.
Effect of Financing on Earnings per Share Henriksen Co., which produces and sells biking equipment, is financed as follows: Bonds payable, 10% (issued at face amount) $250,000 Preferred $1 stock, $10 par 250,000 Common stock, $25 par 250,000 Income tax is estimated at 40% of income. Determine the earnings per share of common stock, assuming that the income before bond interest and income tax is (a) $87,500, (b) $112,500, and (c) $137,500. Enter answers in dollars and cents, rounding to two decimal places. a. Earnings per share on common stock $ b. Earnings per share on common stock $ c. Earnings per share on common stock $
Effect of Financing on Earnings Per Share BSF Co., which produces and sells skiing equipment, is financed as follows: Bonds payable, 10% (issued at face amount) $1,950,000 Preferred 2% stock, $20 par 1,950,000 Common stock, $25 par 1,950,000 Income tax is estimated at 60% of income. Round your answers to the nearest cent. a. Determine the earnings per share of common stock, assuming that the income before bond interest and income tax is $760,500. per share b. Determine the earnings per share of common stock, assuming that the income before bond interest and income tax is $955,500. per share c. Determine the earnings per share of common stock, assuming that the income before bond interest and income tax is $1,150,500. per share
BSF Co., which produces and sells skiing equipment, is financed as follows: Bonds payable, 8% (issued at face amount) $7,500,000 Preferred 2% stock, $10 par 7,500,000 Common stock, $50 par 7,500,000 Income tax is estimated at 40% of income. Round your answers to the nearest cent. a. Determine the earnings per share of common stock, assuming that the income before bond interest and income tax is $1,000,000.$ b. Determine the earnings per share of common stock, assuming that the income before bond interest and income tax is $3,000,000.$ c. Determine the earnings per share of common stock, assuming that the income before bond interest and income tax is $4,500,000.$
Effect of Financing on Earnings per Share Domanico Co., which produces and sells biking equipment, is financed as follows: Bonds payable, 10% (issued at face amount) $1,200,000 Preferred $1 stock, $10 par 1,200,000 Common stock, $25 par 1,200,000 Income tax is estimated at 40% of income. Determine the earnings per share on common stock, assuming that the income before bond interest and income tax is (a) $432,000, (b) $552,000, and (c) $672,000. Enter answers in dollars and cents, rounding to two decimal places. a. Earnings per share on common stock $ b. Earnings per share on common stock c. Earnings per share on common stock
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