The following information relates to two companies for the year to 31 March 20x5.

Income statement (extracts)
	Laurel plc	Hardy plc
	000	000
Profit before interest	350	600
Interest payable	100	0
Profit before tax	250	600
Taxation	100	220
Profit for the period	150	380
Proposed dividend per ordinary share	50p	45p
Market price per ordinary share	3.70	20.10

Statement of financial position (extracts)
	Laurel plc	Hardy plc
	000	000
Equity
Ordinary shares of 1 each	200	200
Retained earnings	320	1,500
	520	1,700
Non-current liabilities
10% bank loan	1,000	0
	1,520	1,700

There were no changes in either the number of shares in issue or in the non- current liabilities during the year to 31 March 20x5.

1. Calculate the following ratios for both Laurel plc and Hardy plc for the year to 31 March 20x5.

a. dividend yield

b. ordinary dividend payout

c. interest cover

d. earnings per ordinary share

e. price/earnings ratio

f. gearing

2. Based on your answers above, which company would make the better long term investment?