Asked by Jacek Buczko on Jun 05, 2024
Verified
Explain how to compute dividend yield and discuss how it is used in analysis of a company's financial condition.
Dividend Yield
Dividend yield is a financial ratio that shows how much a company pays out in dividends each year relative to its stock price, indicating the return on investment for shareholders.
Financial Analysis
The process of evaluating businesses, projects, budgets, and other finance-related entities to determine their performance and suitability.
Financial Condition
An assessment of an entity's ability to meet its financial commitments, based on its assets, liabilities, and equity positions at a given time.
- Compute and evaluate dividend yields to comprehend their role in evaluating a company's financial well-being.
Verified Answer
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kimberly boudreauxJun 11, 2024
Final Answer :
Dividend yield is the ratio of annual cash dividends per share divided by the market value per share of stock.The resulting dividend yield represents the annual amount of cash dividends distributed to common shares relative to their market value.Dividend yield can be used to identify whether a stock is an income stock or a growth stock.Companies that pay large dividends on a regular basis are income stocks.Companies that distribute little or no cash but use the cash to finance expansion are known as growth stocks.
Learning Objectives
- Compute and evaluate dividend yields to comprehend their role in evaluating a company's financial well-being.