Required a. Compute the following profitability measures for the year ended Augu

Question

Required a. Compute the following profitability measures for the year ended August 3, 2014 (Dividends declared were $1.248 per common share): 1. Return on investment, based on net earnings (perform a DuPont analysis). (Round your answer to 1 decimal place.) Answer is complete and correct ROI 9.9 % 2. Return on equity, based on net earnings and total equity. (Round your answer to 1 decimal place.) Answer is complete and correct ROE 57.4 % 3. Price/earnings ratio. Use $41.96 as the year-end market price. (Round your answer to 1 decimal place.) Answer is not complete Price/earnings ratio

Explanation / Answer

3. The P/E ratio is the price an investor is paying for $1 of a company's earnings or profit.

Price earning ratio = market price per share / Diluted Earning per share

= $41.96/2.59 = $16.20

5. It is the ratio which calculates how much has been distributed from earned money for common shares.

Dividend payout ratio = Dividend per share / Basic earning per share

= $1.248/2.61

= 47.82%

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