Why Choose Us?
0% AI Guarantee
Human-written only.
24/7 Support
Anytime, anywhere.
Plagiarism Free
100% Original.
Expert Tutors
Masters & PhDs.
100% Confidential
Your privacy matters.
On-Time Delivery
Never miss a deadline.
Chapter 12 Financial Planning Exercise 7 Calculating key stock performance metrics The Alliance Company recently reported net profits after taxes of $11
Chapter 12
Financial Planning Exercise 7
Calculating key stock performance metrics
The Alliance Company recently reported net profits after taxes of $11.8 million. It has 2.5 million shares of common stock outstanding and pays preferred dividends of $1 million a year. The company's stock currently trades at $68 per share.
- Compute the stock's EPS. Round the answer to the nearest cent.
$ ____ per share
- What's the stock's P/E ratio? Round the answer to two decimal places.
____ times
- Determine what the stock's dividend yield would be if it paid $4.15 per share to common stockholders. Round the answer to two decimal places.
%_____
Expert Solution
| 1) Computation of Earning per Share: | |
| Net Profit after taxes (in millions) | $11.80 |
| Less: Preferred Dividends (in million) | $1 |
| Earnings available to common stock holders (in millions) | $10.80 |
| No. of Common Stock Shares Outstanding (in millions) | 2.5 |
| Earnings Per Share ($10.80 / 2.5) | $4.32 |
2) Computation of Stock's P/E Ratio:
P/E Ratio = Market Price Per Share / Earnings Per Share
= 68 / 4.32
= 15.74 times
3) Computation of Stock's Dividend Yield:
Stock's Dividend Yield = Dividend Per Share / Market Price per share * 100
= 4.15 / 68 * 100
= 6.10%
Archived Solution
You have full access to this solution. To save a copy with all formatting and attachments, use the button below.
For ready-to-submit work, please order a fresh solution below.
