Smith and Jones, Inc. is primarily engaged in the worldwide production, processing, distribution, and marketing of food products. The following information is from its 2000 annual report:

2000 1999 Earnings per share $ 1.08 $ 1.14 Cash dividends per common share $ .80 $ .76 Market price per common share $ 12.94 $ 15.19 Common shares outstanding 25,380,000 25,316,000 Total assets $1,264,086,000 $1,173,924,000 Total liabilities $ 823,758,000 $ 742,499,000 Nonredeemable preferred stock $ 16,600,000 $ 16,600,000 Preferred dividends $ 4,567,000 $ 930,000 Net income $ 32,094,000 $ 31,049,000 Required

a. Based on these data, compute the following for 2000 and 1999:

1. Percentage of earnings retained 4. Dividend yield 2. Price/earnings ratio 5. Book value per share 3. Dividend payout

b. Discuss your findings from the viewpoint of a potential investor.