The dividend yield is calculated as the cash dividend per share divided by the market price per share. Since we are not given these items directly, we will need to calculate them from the information given. Let us assume that the P-E ratio is made up of a $12 market price and $1 of earnings. This gives us the P-E ratio of 12 that we are told the company has. The payout ratio tells us what percentage of earnings were distributed as cash, and since it is .6, in this example $.60 would have been distributed to the shareholders. We now know the necessary information to calculate the dividend yield. The market price is $12 and the cash dividend was $.60. $.60 divided by $12 equals a dividend yield of 5%.
This is the P-E ratio (12) multiplied by the asset turnover ratio (.9). See the correct answer for a complete explanation.
This is the P-E ratio (12) multiplied by the payout ratio (.6). See the correct answer for a complete explanation.
This is the asset turnover ratio (.9) divided by the P-E ratio (12). See the correct answer for a complete explanation.
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