Answer the next eleven (11) questions on the basis of the following data for YTB

Question

Answer the next eleven (11) questions on the basis of the following data for YTB, Inc:

Earnings per share (EPS) over the last 12 months=$2.50

Earnings per share (EPS) over the next 12 months=$4.00

Current stock price=$45

Number of common shares outstanding=20,000,000

Restricted stock = 1,000,000

Annual dividend per share=$1.50

Expected annual growth rate in earnings over the next 5 years=5%

Shares short=1,000,000

Average trading volume=10,000,000 shares

4.     What is the trailing P/E ratio for YTB?

(a)  18

(b)  11.25

(c)  $38.5

(d)  15

5.     What is the forward P/E ratio for YTB?

(a)  18

(b)  11.25

(c)  $38.5

(d)  15

6.     What is the PEG ratio (use trailing P/E ratio) for YTB?

(a)  3.1

(b)  4

(c)  2.5

(d)  3.6

7.     What is the market capitalization for YTB?

(a)  $600m

(b)  $700m

(c)  $800m

(d)  $900m

8.     What is the dividend yield for YTB?

(a)  2.33%

(b)  3.75%

(c)  3.33%

(d)  1.62%

9.     What is the float for YTB?

(a)  19m shares

(b)  20m shares

(c)  21m shares

(d)  22m shares

10.   What is the short % of float for YTB?

(a)  10%

(b)  5.26%

(c)  8.26%

(d)  5.0%

11.   What is the short ratio for YTB?

(a)  5%

(b)  5.26%

(c)  10%

(d)  12%

12.   What is the earnings yield (based on trailing EPS) for YTB?

(a)  27.77%

(b)  8.88%

(c)  10%

(d)  5.55%

13.   What is the payout ratio (based on trailing earnings) for YTB?

(a)  20%

(b)  50%

(c)  60%

(d)  40%

14.   What is the retention (or plowback) ratio for YTB?

(a)  20%

(b)  50%

(c)  60%

(d)  40%

15.        Nachman Industries just paid a dividend of D0 = $1.32.  Analysts expect the company's dividend to grow by 30% this year, by 10% in Year 2, and at a constant rate of 5% in Year 3 and thereafter.  The required return on this low-risk stock is 9.00%.  What is the best estimate of the stock

Explanation / Answer

4. P/EPS (Prev) = 45/2.5 = 18 (price of stock/EPS )

5. P/EPS (Forward) = 45/4 = 11.25 (price of stock/EPS )

6.PEG = 18/5 = 3.6 (Price/EPS/Growth)

7. Market cap = No. of shares * Value of shares = 20M * 45 = 900 M

8. Dividend Yield = 1.5/45 = 3.33% (Dividend given / Stock Price)

9. 20M - 1M = 19 M (Total shares - Restricted shares)

10. 1/(20-1) = 5.26% (Short shares / Float)

11. 1/10 = 10% (Float shares / Volume)

12. E/P = 2.5/45 = 5.55%

13. Payout = 1.5/2.5 = 60% (Dividend/EPS)

14. Rentention = (2.5-1.5)/2.5 = 40% ((EPS-Dividend)/EPS)

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