The MedTech Company recently reported net profits after taxes of ?$15.8 million.

Question

The MedTech Company recently reported net profits after taxes of ?$15.8 million. It has 2.9 million shares of common stock outstanding and pays preferred dividends of ?$0.8 million per year. a. Compute the? firm's earnings per share? (EPS). b. Assuming that the stock currently trades at ?$64.58 per? share, determine what the? firm's dividend yield would be if it paid ?$3.37 per share to common stockholders. c. What would the? firm's dividend payout ratio be if it paid ?$3.37 per share in? dividends? a. The? firm's EPS is ?$ nothing.???(Round to the nearest? cent.)

Explanation / Answer

a.EPS = Earnings for Equity/No. Of Shares

Net profit after Taxes = 15.8 million

Less: Preferred Dividend 0.8 million

Earnings for Common Stockholders (A) = 15 million

Outstanding no. Of common shares (B) = 2.9 million

Therefore, EPS = $5.17

b.Market Value of Stock = $64.58

Dividend Paid = $3.37

Dividend Yield = Dividend per Share*100/Market Price per Share

=3.37*100/64.58 = 5.22%

c.Dividend Payout Ratio =DPS/EPS

= 3.37/5.17 = 65.18%

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