Sultan Services has 1.2 million shares outstanding. It expects earnings at the end of the year of $5.6 million. Sultan pays out 60% of its earnings in total 40% paid out as dividends and 20% used to repurchase shares. If Sultan’s earnings are expected to grow up 7% per year, these payout rates do not change, and Sultan’s equity cost of capital is 9%, what is Sultan’s share price?
International Business Machines (IBM) has earnings per share of $7.20 and a P/E ratio of 15.26. What is the stock price?
In 2014, Esther Corporation reported net income of $600,000. It declared and paid preferred stock dividends of $150,000 and common stock dividends of $60,000. During 2014, Esther had a weighted average of 250,000 common shares outstanding.
Compute Esther’s 2014 earnings per share.
a. $1.56
b. $1.80
c. $2.40
d. $3.00
The market value of Yeates Corporation’s common stock had become excessively high. The stock was currently selling for $270 per share. To reduce the market price of the common stock, Yeates declared a 3-for-1 stock split for the 310,000 outstanding shares of its $12 par value common stock.
Required:
Determine the number of common shares outstanding and the par value after the spli
Lever Brothers has a debt ratio (debt to assets) of 40%. Management is wondering if its current capital structure is too conservative. Lever Brothers’ present EBIT is $3 million, and profits available to common shareholders are $1,560,000, with 342,857 shares of common stock outstanding. If the firm were to instead have a debt ratio of 60%, additional interest expense would cause profits available to stockholders to decline to $1,440,000, but only 228,571 common shares would be outstanding. What is the difference in EPS at a debt ratio of 60% versus 40%?
A. $1.75
B. $2.00
C. $3.25
D. $4.50
