Question
Profitability: d. Calculate ROI, showing margin and turnover, for the most recent year. e. Calculate ROE for the most recent year. f. Calculate the price/earnings
Profitability:
d. Calculate ROI, showing margin and turnover, for the most recent year.
e. Calculate ROE for the most recent year.
f. Calculate the price/earnings ratio for the most recent year, using the company's year-end market price per share of common stock in the numerator and diluted earnings per share in the denominator.
g. Calculate the dividend payout and dividend payout and dividend yield ratios for the most recent year.
h. Based on the results of your calculations in parts d, e, and f, assess the company's overall profitability. Explain which ratios indicate particular strengths and/or weaknesses 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%.
i. As an investor in this company's stock, would you be pleased with this year's dividend yield? How would your dividend yield "expectations" change, if at all, if the company's ROI was 5% higher? Explain.
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