The Income Statement for Pointe Company for the Year Ended

question 122

Essay

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.

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Definitions:

FCFS System

First-Come, First-Served System, a processing sequence where the first item to arrive is the first to be processed, commonly used in queue management and scheduling.

Arrival Rate

In queuing theory, it is the average rate at which entities (e.g., customers, data packets) arrive at a service facility within a given time period.

Service Rate

The rate at which a service system can process requests, often measured in customers or transactions per unit of time.

Transient Period

A phase or interval of time that is temporary and often marks a transition between two states or conditions.