Financial Statements for Oratz Company Appear Below Total Dividends During Year 2 Were

question 99

Multiple Choice

Financial statements for Oratz Company appear below:

$\begin{array}{|l|r|}\hline&\text { Oratz Company } \\&\text { Income Statement } \\&\text { For the Year Ended December 31, Year } \\&2\\&\text { (dollars in thousands) }\\\hline \text { Sales (All on Account) } & \$ 1630 \\\hline \text { Costs of Goods Sold } & \$ 1140 \\\hline \text { Gross Margin } & \$ 490 \\\hline \text { Operating Expenses } & \$ 190 \\\hline \text { Net Operating Income } & \$ 300 \\\hline \text { Interest Expense } & \$ 30 \\\hline \text { Net Income before Taxes } & \$ 270 \\\hline \text { Income Taxes (30\%) } & \$ 81 \\\hline \text { Net Income } & \$ 189\\\hline\end{array}$

Total dividends during Year 2 were $\$ 139,000$ , of which $\$ 6,000$ were preferred dividends. The market price of a common share on December 31, Year 2 was $\$ 260$ .


-Oratz Company's earnings per common share for Year 2 was closest to which of the following?Do not round intermediate calculations.

• A) $1.74.
• B) $19.61.
• C) $20.25.
• D) $28.93.

---

Definitions:

Financial Statements

Official records that outline a company's financial activities and conditions, including the balance sheet, income statement, and cash flow statement.

Firm's Financial Position

The status of a company's assets, liabilities, and equity at a given point in time, as reflected in its financial statements.

Market/Book Ratio

Also known as the price-to-book ratio, it compares a company's market value with its book value, indicating how much investors are paying for each dollar of net assets.

Stock Price

Stock price is the current market price of a share of stock, reflecting the value the market places on a company.