The Income Statement for the Carolina Service Company for the Year

question 26

Essay

The income statement for the Carolina Service Company for the year ended December 31, 2014, appears below. $$\begin{array} { l l } \text { Sales revenue } & \$ 670,000 \\\text { Cost of goods sold } & 390,000 \\\text { Gross profit } & 280,000 \\\text { Expenses } & \underline{ 180,000 ^ { * } } \\\text { Net income } & \underline{\$ 100,000}\end{array}$$
*Includes $25,000 of interest expense and $20,000 of income tax expense.
Additional information:
1. Common stock outstanding on January 1, 2014, was 50,000 shares. On July 1, 2014, 10,000 more shares were issued.
2. The market price of Carolina's stock was $22 at the end of 2014.
3. Cash dividends of $35,000 were paid, $5,000 of which were paid to preferred stockholders.
Instructions
Compute the following ratios for 2014:
(a) Earnings per share.
(b) Price-earnings.
(c) Times interest earned.

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Definitions:

CPM

Stands for "Cost Per Thousand Impressions," a metric used in advertising to denote the cost of displaying an ad to a thousand viewers or readers.

Advertising Messages

The content conveyed in advertisements aimed at informing, persuading, or reminding consumers about products, services, or brands.

Frequency

A measure of how often an event occurs or the rate at which a repeating event, such as a radio wave, oscillates.

Radio Advertising

A marketing strategy that uses radio broadcasts to reach a wide audience, promoting products, services, or events through audio advertisements.