Question

Find the EPS, P/E ratio, and dividend yield of a company that has 5 million shares of common stock outstanding (the shares trade in the market at $28.29), earns 8% after taxes on annual sales of $158 million, and has a dividend payout ratio of 27.03%. At what rate would the company's net earnings be growing if the stock had a PEG ratio of 1.86?

The stock's EPS is $____

Answer #1

**Answer : Calculation of EPS**

**EPS = Earning Available to equity shareholders / Total
Number os shares outstanding**

= (Annual Sales * After Tax Profit) / 5 million

= (158 million * 8%) / 5 million

= 12.64 million / 5 million

**= 2.528**

**Calculation of Price Earning Ratio (P/E Ratio) = Price /
EPS**

= 28.29 / 2.528

**= 11.1906645569 or 11.19**

**Calculation of Dividend Yield = Dividend / Current
Market Price**

= (2.528 * 27.03%) / 28.29

= 0.6833184 / 28.29

**= 0.0241540615 or 2.42%**

**Calculation of Growth in Earning**

PEG Ratio = Price Earning Ratio (calculated above) / Earning Growth rate

**Earning Growth rate = 11.19 / 1.86**

**= 6.01648632091% or 6.02%**

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