Profitability

1. Calculate ROI, showing margin and turnover, for the most recent year.
2. Calculate ROE for the most recent year.
3. Calculate the price/earnings ratios for the most recent year, using the companys year-end market price per share of common stock in the numerator and diluted earnings per share in the denominator.
4. Calculate the dividend payout and dividend yield ratios for the most recent year.
5. Based on the results of your calculations in parts d, e, and f, assess the companys overall profitability. Explain which ratios indicate strengths and/or weakness within the company. Assume the following industry averages:

• ROI = 15%
• Margin = 10%
• Turnover = 1.5
• ROE = 20%
• Price/Earnings = 14.0
• Dividend payout = 40%
• Dividend yield = 5%

1. As an investor in this companys stock, would you be pleased with this years dividend yield? How would your dividend yield expectations change, if at all, if the companys ROI was 5% higher? Explain.

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