The income statement for Pointe Company for the year ended December 31 2017 appears below. $\begin{array}{ll}
\text { Sales } & \$ 720,000 \
\text { Cost of goods sold } & \$ 380,000 \
\text { Gross profit } & 340,000 \
\text { Expenses } & 190,000^{*} \
\text { Net income } & \$ 150,000
\end{array}$ *Includes $20000 of interest expense and $25000 of income tax expense.
Additional information:
1. Common stock outstanding on January 1 2017 was 50000 shares. On July 1 2017 10000 more shares were issued.
2. The market price of Pointe's stock was $11.70 at the end of 2017.
3. Cash dividends of $30000 were paid $7000 of which were paid to preferred stockholders.
Instructions
Compute the following ratios for 2017:
(a) Earnings per share.
(b) Price-earnings.
(c) Times interest earned.

Question

Quizplus · Accepted Answer

The Answer of The income statement for Pointe Company for the year ended December 31 2017 appears below. $\begin{array}{ll}
\text { Sales } & \$ 720,000 \
\text { Cost of goods sold } & \$ 380,000 \
\text { Gross profit } & 340,000 \
\text { Expenses } & 190,000^{*} \
\text { Net income } & \$ 150,000
\end{array}$ *Includes $20000 of interest expense and $25000 of income tax expense.
Additional information:
1. Common stock outstanding on January 1 2017 was 50000 shares. On July 1 2017 10000 more shares were issued.
2. The market price of Pointe's stock was $11.70 at the end of 2017.
3. Cash dividends of $30000 were paid $7000 of which were paid to preferred stockholders.
Instructions
Compute the following ratios for 2017:
(a) Earnings per share.
(b) Price-earnings.
(c) Times interest earned.

The Income Statement for Pointe Company for the Year Ended