1)what\'s the P/E ratio 2)what\'s the dividend yield ratio The comparative finan
ID: 2592266 • Letter: 1
Question
1)what's the P/E ratio
2)what's the dividend yield ratio
The comparative financial statements for Prince Company are below Year 2 Year 1 Income statement Sales revenue Cost of goods sold Gross proft Operating expenses and interest expense Pretax income Income tax Net income Balance sheet: $230,000 122,000 108,000 60,000 48,000 12,000 36,000 S 177,000 104,000 73,000 55,000 18,000 6,000 12,000 $ 8,000 16,000 44,000 51,000 119,000 $ 18,000 47,000 34,000 20,000 119,000 $ 9,000 20,000 36,000 42,000 107,000 S 21,000 47,000 32,000 7,000 07,000 Accounts receivable (net) Property and equipment (net) Total assets Current liabilities (no interest) Long-term liabilities (10% interest) Common stock ($5 par value, 6,800 shares outstanding)) Retained earnings Total liabilities and stockholders equity Assume that the stock price per share is $48 and that dividends in the amount of $13.50 per share were paid during Year 2. Compute the following ratios: (Round your answers to 2 decimal places Enter percentage answers rounded to 2 decimal places (i.e. 0.1234 should be entered as 12.34).)Explanation / Answer
Answer to Part 1.
P/E Ratio = Price per share/ Earning per share
Earning per share = Net Income available for Distribution / No. of shares outstanding
Earning per share = 36,000 / 6,800
Earning per share = $5.29
Dividend Yield Ratio = Dividend per share / Price per share
Dividend Yield Ratio = 13.50 / 48
Dividend Yield Ratio = 28.13%
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