CALCULATIN G E Y STO C P E RFORM AN CE M E TRICS.

The Rivers Company recently reported net profits after taxes of $15.8 million. It has 2.5 million shares of common stock outstanding and pays preferred dividends of $1 million a year. The company’s stock currently trades at

$60 per share.

a. Compute the stock’s earnings per share

(EPS).

b. What is the stock’s P/E ratio?

c. Determine what the stock’s dividend yield would be if it paid $1.75 per share to common stockholders.. LO1