Sam Smart has been very busy running his business Smart Sports for the last few years. Sam’s cousin Dan, who lives in Australia, has been playing the lottery for the last five years and has recently struck lucky and won AU\($20,000\). Sam is in need of a holiday, and as both he and Dan have a passion for snowboarding, they have decided to spend \($2,000\) each on a holiday in the Victoria ski resorts near Melbourne. Dan intends to invest the remaining AU\($18,000\) in a company that makes snowboards. Being environmentally aware, he has reduced his list of possible investments to two Australian businesses well known for having good social and corporate responsibility. He is considering investing in Rick’s Boards, based in Bunbury, Western Australia, or Peter’s Snowsports from Melbourne. Dan knows Sam has learned much about accounting since he started his business and seeks Sam’s advice on which company to invest in.

* Dan has obtained the financial statements to 30 September 2016 for both companies, extracts from which are given in Tables 9.5 and 9.6.

* Rick’s Boards paid a dividend of AU\($0.04\) per share for the year to 30 September 2016, compared to Peter’s Snowsports, who paid a dividend of AU\($0.06\) per share.

° The share prices of Rick’s Boards and Peter’s Snowsports were AU\($1.80\) and AU\($2.30\), respectively, as at 30 September 2016.

° The historical earnings per share for the two companies are shown in Table 9.4.

Dan is hoping that a long-term gain on his shares, plus any dividends he receives, will enable him to further indulge his passion for travelling.
Advise Dan as to which business would appear to be the best investment opportunity for him, by calculating and interpreting the following ratios for 2016:
1. Earnings per share.
2. Price to earnings ratio.

3.Dividend yield.

4.Dividend cover.

5 . Interest cover.

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Table 9.4 EPS for year ended 30 September 2013 2014 2015 2016 cents cents cents cents Rick's Boards 28 36 32 30 Peter's Snowsports 20 25 32 34