The financial statements for Leslo Inc. are as follows: LESLO INC. Balance Sheet March 31 Assets Current assets: Cash $ 6,500 Accounts receivable, net 35,000 Merchandise inventory 70,000 Prepaid expenses 3,500 Total current assets 115,000 Property and equipment, net 185,000 Total assets $ 300,000 Liabilities and Shareholders’ Equity
The financial statements for Leslo Inc. are as follows:
| LESLO INC. | |||||
| March 31 | |||||
| Assets | |||||
| Current assets: | |||||
| Cash | $ | 6,500 | |||
| 35,000 | |||||
| Merchandise inventory | 70,000 | ||||
| Prepaid expenses | 3,500 | ||||
| Total current assets | 115,000 | ||||
| Property and equipment, net | 185,000 | ||||
| Total assets | $ | 300,000 | |||
| Liabilities and Shareholders’ Equity | |||||
| Liabilities: | |||||
| Current liabilities | $ | 50,000 | |||
| Bonds payable, 10% | 80,000 | ||||
| Total liabilities | 130,000 | ||||
| Shareholders’ equity: | |||||
| Common shares, no par (6,000 @ $5) | $ | 30,000 | |||
| 140,000 | |||||
| Total shareholders’ equity | 170,000 | ||||
| Total liabilities and shareholders’ equity | $ | 300,000 | |||
| LESLO INC. | ||
| Income Statement | ||
| For the Year Ended March 31 | ||
| Sales | $ | 420,000 |
| Less: Cost of goods sold | 292,500 | |
| Gross margin | 127,500 | |
| Less: Operating expenses | 89,500 | |
| Net operating income | 38,000 | |
| Interest expense | 8,000 | |
| Net income before taxes | 30,000 | |
| Income taxes (30%) | 9,000 | |
| Net income | $ | 21,000 |
Account balances at the beginning of the year were as follows: accounts receivable, $25,000; inventory, $60,000. All sales were on account.
Assume that Leslo Inc. paid dividends of $2.10 per share during the year. Also assume that the company’s common shares had a market price of $42 each at the end of the year and there was no change in the number of outstanding common shares during the year.
Required:
Compute financial ratios as follows:
1. Earnings per share. (Round your answer to 2 decimal places.)
2. Dividend payout ratio. (Round your intermediate calculations to 2 decimal places. Round your percentage answer to nearest whole number.)
3. Dividend yield ratio. (Round your percentage answer to nearest whole number.)
4. Price–earnings ratio. (Round your intermediate calculations to 2 decimal places. Round your answer to nearest whole number.)
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