Financial information for Nokia follows. Net income (in millions) 260 Cash Divid

Question

Financial information for Nokia follows.

Net income   (in millions)                                                 260

Cash Dividends declared  (in millions)                         1,481

Cash Dividends declared per share                               0.40

Number of shares outstanding (in million)*                  3,708

Equity applicable to shares (in millions)                      14,749

* Assume that for Nokia the year-end number of shares outstanding approximates the weighted-average shares outstanding.

Required

1. Compute book value per share for Nokia

2. Compute earnings per (EPS) for Nokia

3. Compare Nokia's dividends per share with its EPS. Is Nokia paying out large or small amount of its income as dividends? Explain.

Explanation / Answer

1) Book value = equity applicable / number od shares = 14749 / 3708 = 3.9776

2) EPS = 260 / 3708 = 0.07

3) EPS is 0.07 while dividend is 0.4. Yes, Nokia is paying dividends higher than the income as dividend( 0.07 ) is less than EPS ( 0.4 ).

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