Joisa plc is a business that specializes in the manufacturing of designer luggage.

A luxury goods company Luxy Goods plc is considering buying Joisa plc so that they can expand their luxury goods business into luggage.

The financial information is available for the three years to June 2012 and is shown in Table 9.8.

REQUIRED:

a) Calculate the following for the three year period:
Earnings per share Price to earnings ratio Dividend yield Dividend cover.

b) What would be your advice to Luxy Goods plc in relation to the potential purchase ofJ oisa plc?

Transcribed Image Text:

Table 9.8 Profit after tax Dividend paid Number of ordinary shares in issue Market price per share at the year-end 30 Jun 2010 30 Jun 2011 30 Jun 2012 0.9m 0.5m 1.3m 0.7m 2.6m 0.9m 6 million 6 million 6 million 1.1 1.2 1.85