The income statement for Woodford Corporation for the year ended December 31, 2014 appears below:
*Includes $30,000 of interest expense and $16,000 of income tax expense.
Additional information:
1. The weighted average number of common shares issued on December 31, 2014 were 50,000 shares.
2. The market price of Woodford's shares was $18 at the end of 2014.
3. Cash dividends of $10,000 were paid, $6,000 of which were paid to preferred shareholders.
Instructions
a. Calculate the following ratios for 2014:
i. earnings per share
ii. price-earnings
iii. interest coverage
iv. total dividend payout
b. Comment on the above ratios, assuming the averages for the industry in which Woodford operates are as follows:
(i) earnings per share $1.20
(ii) price-earnings 10 times
(iii) interest coverage 2.2 times
(iv) dividend payout ratio 15%

Question

The income statement for Woodford Corporation for the year ended December 31, 2014 appears below: 
 *Includes $30,000 of interest expense and $16,000 of income tax expense.
Additional information:
1. The weighted average number of common shares issued on December 31, 2014 were 50,000 shares.
2. The market price of Woodford's shares was $18 at the end of 2014.
3. Cash dividends of $10,000 were paid, $6,000 of which were paid to preferred shareholders.
Instructions
a. Calculate the following ratios for 2014:
i. earnings per share
ii. price-earnings
iii. interest coverage
iv. total dividend payout
b. Comment on the above ratios, assuming the averages for the industry in which Woodford operates are as follows:
(i) earnings per share $1.20
(ii) price-earnings 10 times
(iii) interest coverage 2.2 times
(iv) dividend payout ratio 15%

Quizplus · Accepted Answer

The Answer of The income statement for Woodford Corporation for the year ended December 31, 2014 appears below: 
 *Includes $30,000 of interest expense and $16,000 of income tax expense.
Additional information:
1. The weighted average number of common shares issued on December 31, 2014 were 50,000 shares.
2. The market price of Woodford's shares was $18 at the end of 2014.
3. Cash dividends of $10,000 were paid, $6,000 of which were paid to preferred shareholders.
Instructions
a. Calculate the following ratios for 2014:
i. earnings per share
ii. price-earnings
iii. interest coverage
iv. total dividend payout
b. Comment on the above ratios, assuming the averages for the industry in which Woodford operates are as follows:
(i) earnings per share $1.20
(ii) price-earnings 10 times
(iii) interest coverage 2.2 times
(iv) dividend payout ratio 15%

The Income Statement for Woodford Corporation for the Year Ended