### Five Measures of Solvency or ProfitabilityThe balance sheet for Garcon Inc. at the end of the current fiscal year indicated the following:- **Bonds payable, 6%:** $1,500,000- **Preferred $10 stock, $100 par:** $88,000- **Common stock, $14 par:** $954,800.00Income before income tax was $171,000, and income taxes were $25,800 for the current year. Cash dividends paid on common stock during the current year totaled $16,368. The common stock was selling for $16 per share at the end of the year.### Determine each of the following:Round answers to one decimal place, except for dollar amounts which should be rounded to the nearest whole cent. Use the rounded answers for subsequent requirements, if required.a. **Times interest earned ratio**: \[ \text{Answer:} \; \_\_\_ \text{ times} \] b. **Earnings per share on common stock**: \[ \text{Answer:} \; \$\_\_\_ \] c. **Price-earnings ratio**: \[ \text{Answer:} \; \_\_\_ \] d. **Dividends per share of common stock**: \[ \text{Answer:} \; \$\_\_\_ \] e. **Dividend yield**: \[ \text{Answer:} \; \_\_\_ \% \]#### Explanation:1. **Times Interest Earned Ratio**: Measures the company's ability to meet its debt obligations based on its earnings. It is calculated using the formula: \[ \text{Times Interest Earned Ratio} = \frac{\text{Income before Income Tax} + \text{Interest Expense}}{\text{Interest Expense}} \]2. **Earnings Per Share on Common Stock**: Determines the portion of a company's profit attributed to each outstanding share of common stock. It is calculated using the formula: \[ \text{Earnings Per Share} = \frac{\text{Net Income} - \text{Preferred Dividends}}{\text{Weighted Average Shares Outstanding}} \]3. **Price-Earnings Ratio**: A valuation ratio of a company's current share price compared to its per

This question is based on the Ratio Analysis of Financial Management, based on the information…

Five Measures of Solvency or Profitability The balance sheet for Garcon Inc. at the end of the current fiscal year indicated the following: Bonds payable, 6% $1,500,000 Preferred $10 stock, $100 par $88,000 Common stock, $14 par $954,800.00 Income before income tax was $171,000, and income taxes were $25,800 for the current year. Cash dividends paid on common stock during the current year totaled $16,368. The common stock was selling for $16 per share at the end of the year. Determine each of the following. Round answers to one decimal place, except for dollar amounts which should be rounded to the nearest whole cent. Use the rounded answers for subsequent requirements, if required a. Times interest earned ratio times b. Earnings per share on common stock c. Price-earnings ratio d. Dividends per share of common stock e. Dividend yield

Five Measures of Solvency or Profitability The balance sheet for Garcon Inc. at the end of the current fiscal year indicated the following: Bonds payable, 6% $1,500,000 Preferred $10 stock, $100 par $88,000 Common stock, $14 par $954,800.00 Income before income tax was $171,000, and income taxes were $25,800 for the current year. Cash dividends paid on common stock during the current year totaled $16,368. The common stock was selling for $16 per share at the end of the year. Determine each of the following. Round answers to one decimal place, except for dollar amounts which should be rounded to the nearest whole cent. Use the rounded answers for subsequent requirements, if required a. Times interest earned ratio times b. Earnings per share on common stock c. Price-earnings ratio d. Dividends per share of common stock e. Dividend yield

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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