Question

# Find the​ EPS, P/E​ ratio, and dividend yield of a company that has 5 million shares...

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 \$____

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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