Answer (C) is correct . Schodack’s ratios can be calculated as follows: Price-earnings ratio = 1 ÷ Earnings yield=1 ÷ Price-earnings ratio= 1 ÷ 7.2 = 13.9%.Dividends per share ÷ Market price per share = Dividend yield,Dividends per share =Market price per share × Dividend yield = $25 × 5% = $1.25,Earnings per share ÷ Market price per share = Earnings yield,Earnings per share = Market price per share × Earnings yield = $25 × 0.13889 = $3.472,Dividend payout ratio = Dividends per share ÷ Earnings per share = $1.25 ÷ $3.472 = 36%
Answer (A) is incorrect because The yield is almost 14% (1 ¡Â 7.2).
Answer (B) is incorrect because The payout ratio is only 36% ($1.25 ¡Â $3.47).
Answer (D) is incorrect because The payout ratio is only 36% ($1.25 ¡Â $3.47).< |
