Chapter 2 formulas

Question 1

Earnings per share

Answer 1

(EAT- preferred dividends)/ number of common shares

OR

Earnings available to common shareholders/ # of common shares

Question 2

Dividend payout ratio

Answer 2

Dividend paid/Net income x 100%

Question 3

Price earning ratio (P/E)

Answer 3

Price per share/ Earnings per share

Question 4

Working capital

Answer 4

Current assets- current liabilities

Question 5

net assets

Answer 5

Assets- Liabilities

Question 6

Book value per share

Answer 6

common stock +retained earnings/ # of common shares