An investor is trying to decide whether to invest in the long-term bonds and common stock of
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An investor is trying to decide whether to invest in the long-term bonds and common stock of Mayer Company and Matthews Company. Both companies operate in the same industry. Both also pay a dividend per share of $8 and have a yield of 10 percent on their long-term bonds. Other data for the two companies are as follows:
Compute the debt to equity, interest coverage, and price/earnings (P/E) ratios as well as the dividends yield and comment on the results. (Note: Round computations to one decimal place.)
DividendA dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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Mayer Total assets Total liabilities Income before income taxcs Interest expensc Earnings per share Market price of common stock Company $4,800,000 2,160,000 576,000 194,400 6.40 80.00 Matthews Company S2,160,000 1,188,000 259,200 106,920 10.00 95.00
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Comment Matthews Company has a greater debt to equity ratio 12 times versus 08 times and a smaller i...View the full answer
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