Q2. The following information is related to PQR
company and XYZ company for the year 2013:
PQR Company XYZ Company
Cash dividend declared and paid during the year $750,000
$124,800
Common stock $25,000,000 $12,000,000
Number of shares of common stock outstanding 50,000 24,000
Par value of a share $50 $50
Market value of a share $60 $52
Both the companies belong to same industry. PQR is an old and
well-established company where as XYZ is a new company. The
historical data shows that the PQR has a stable annual dividend
distribution to stockholders.
Required:
Calculate dividend yield ratio of both the companies. Which company
would you recommend for investment in shares? Explain with
reasons.
please comment down for any clarification.
Get Answers For Free
Most questions answered within 1 hours.