Chapter 11
Financial Statement Analysis
555
AP-13A (
6
)
Testa Inc. had a net income of $158,000 for the year ended December 31, 2016. The company
does not have any preferred shares and has 45,000 common shares outstanding for the entire
year. During the year, they paid out $20,000 in dividends. Assume the market price of each
common share is $24, which happens to be double of the book value per share.
Required
a) Calculate earnings per share.
b) Calculate the dividend payout ratio.
c) Calculate the price earnings ratio.
