Tina Bell has just gotten a call from her stockbroker, and he is strongly suggesting that she buy 1,000 shares of Moonbean Coffee House stock. He wants her to buy today;

however, Tina wants to analyze the value of the stock on her own first.

Tina has the following information about Moonbean stock:

Net Income $1,200,000 Total Number of Common Shares Outstanding 750,000 Market Price per Share $26.60 Dividends per Share $0.80 Given this information, help Tina calculate the following investor ratios:

a. Earnings per Share

b. Price per Earnings

c. Dividend Payout Ratio

d. Dividend Yield Ratio

e. Based upon the dividend payout ratio only, what would you expect this company’s view to be regarding reinvesting earnings back into the business versus paying them out in stockholder dividends?

f. Would you advise Tina to buy this stock? What additional information might you seek in order to help her make a good decision? Explain your answer.