Answer:
(a) $1.73
(b) 12.74
(c) 5.80
Explanation:
Given that,
Sales revenue = $670,000
Cost of goods sold = 390,000
Gross profit = 280,000
Expenses = 180,000 Â
Net income = $100,000
Interest expense = $25,000
Income tax expense = $20,000
(a) Earnings per share:
= (Net income - Preferred dividend) ÷ Weighted average common stock
= ($100,000 - $5,000) ÷ 55,000
= $95,000 ÷ 55,000
= $1.73
(b) Price-earnings:
= Stock price ÷ Earnings per share
= $22 ÷ $1.73
= 12.74
(c) Income before interest and taxes:
= Net income + Interest expense + Income taxes
= $100,000 + $25,000 + $20,000
= $145,000
Times interest earned:
=  Income before interest and taxes ÷ Interest expenses
= $145,000 ÷ $25,000
= 5.80