Exercise 12-11 Matthias Medical manufactures hospital beds and other institutional furniture. The company’s comparative balance sheet and income statement for 2012 and 2013 follow.
Matthias Medical
Comparative Balance Sheet
As of December 31
2013
2012
Assets
Current assets
Cash
$373,000
$417,400
Accounts receivable, net
1,065,900
776,500
Inventory
748,000
681,000
Other current assets
396,000
247,100
Total current assets
2,582,900
2,122,000
Property, plant, & equipment, net
8,977,605
8,484,895
Total assets
$11,560,505
$10,606,895
Liabilities and Stockholders’ Equity
Current liabilities
$3,198,000
$2,846,100
Long-term debt
3,702,600
3,892,650
Total liabilities
6,900,600
6,738,750
Preferred stock, $5 par value
57,100
57,100
Common stock, $0.25 par value
100,000
103,900
Retained earnings
4,502,805
3,707,145
Total stockholders’ equity
4,659,905
3,868,145
Total liabilities and stockholders’ equity
$11,560,505
$10,606,895
Matthias Medical
Comparative Income Statement and Statement of Retained Earnings
For the Year
2013
2012
Sales revenue (all on account)
$10,580,000
$9,613,950
Cost of goods sold
5,579,000
5,298,750
Gross profit
5,001,000
4,315,200
Operating expenses
2,840,200
2,634,150
Net operating income
2,160,800
1,681,050
Interest expense
392,000
308,700
Net income before taxes
1,768,800
1,372,350
Income taxes (30%)
530,640
411,705
Net income
$1,238,160
$960,645
Dividends paid
Preferred dividends
29,500
29,500
Common dividends
413,000
417,000
Total dividends paid
442,500
446,500
Net income retained
795,660
514,145
Retained earnings, beginning of year
3,707,145
3,193,000
Retained earnings, end of year
$4,502,805
$3,707,145
Calculate the earnings per share (average of 417,000 shares outstanding for the year) for 2013. (Round answer to 2 decimal places, e.g. 2.55.)
Earning per share
$ per share
Calculate the price/earnings ratio (market price of $45 at year-end) for 2013. (Round answer to 2 decimal places, e.g. 2.55.)
Price/earnings ratio
Calculate the dividend payout ratio (dividends of $1.04 per common share for the year) for 2013. (Round answer to 2 decimal places, e.g. 2.55%.)
Dividend payout ratio
%
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