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

Income statement (extracts)

	Laurel plc		Hardy plc
	000		000
Trading 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 at 31 March 20x5	3.70		20.10

Balance sheets (extracts)

	Laurel plc		Hardy plc
	000		000
Equity
Ordinary shares (1.00 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.

   1. dividend yield

   2. ordinary dividend payout

   3. interest cover

   4. earnings per ordinary share

   5. price/earnings ratio

   6. gearing

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