Maytag Company earns $4.80 per share. Today the stock is trading at $59.25. The company pays an annual dividend of $1.40.
Calculate (a) the price-earnings ratio (round to the nearest whole number) and
(b) the yield on the stock (to the nearest tenth percent)
Hey for b - the yield on the stock, the answer is 2.4%. I am not sure how to get that.
59.25 / 4.80 = ?
100 (1.40/4.80) = ?
Oh, sorry, I used earnings not price.
100 (1.40/59.25) = 2.36 % round to 2.4%
To calculate the price-earnings ratio (P/E ratio), you need to divide the market price per share by earnings per share.
(a) P/E ratio:
Price-Earnings Ratio = Market Price per Share / Earnings per Share
Given data:
Earnings per share (EPS) = $4.80
Market price per share = $59.25
P/E ratio = $59.25 / $4.80
To obtain the answer, divide $59.25 by $4.80 and round to the nearest whole number.
(b) To calculate the yield on the stock, you need to divide the annual dividend per share by the market price per share.
Yield on Stock = (Annual dividend per Share / Market Price per Share) × 100
Given data:
Annual dividend per share = $1.40
Market price per share = $59.25
Yield on Stock = ($1.40 / $59.25) × 100
To get the yield on the stock, divide $1.40 by $59.25, multiply by 100, and round to the nearest tenth percent.