Asked by Nguyen Hien Minh Quan on Jun 16, 2024
Verified
The following data were reported for Favre Company:
Calculate each of the following ratios.Round your answers to two decimal places.
A.Dividend yield
B.Price/earnings ratio
C.Quality of income
Quality of Income
A measure of how easily a firm's accounting income can be converted into cash, reflecting the company's financial stability.
- Acquire the proficiency in calculating and understanding the dividend yield ratio.
- Acquire knowledge of and determine the price/earnings (P/E) ratio, as well as its role in investment decision-making.
- Understand the method of rounding financial ratios to a given decimal position for documentation purposes.
Verified Answer
GB
Gurjot BadyalJun 17, 2024
Final Answer :
A.Dividend yield = 3.0% = .60 ÷ $20.
B.Price/earnings ratio = $12.74 = $20 ÷ $1.57.
EPS = $275,000 ÷ 175,000 shares = $1.57.
C.Quality of income = 1.02 = $280,000 ÷ 275,000.
B.Price/earnings ratio = $12.74 = $20 ÷ $1.57.
EPS = $275,000 ÷ 175,000 shares = $1.57.
C.Quality of income = 1.02 = $280,000 ÷ 275,000.
Learning Objectives
- Acquire the proficiency in calculating and understanding the dividend yield ratio.
- Acquire knowledge of and determine the price/earnings (P/E) ratio, as well as its role in investment decision-making.
- Understand the method of rounding financial ratios to a given decimal position for documentation purposes.
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