This assignment contains 4 questions, and you need to answer ALL the questions. Question 1 (30 marks) Part 1 - 17 marks Lorenzo Limited ("Lorenzo") is a company engaged in the trading of fitness products, and it is currently the market leader. The following highlights Lorenzo's financial information for the year ended 31 December 2018: Total assets Total liabilities Total preferred stock (3.5% stated dividend rate) Net profit before tax Number of common stock issued Number of common stock outstanding Current market price of common stock Common stock dividends declared and paid Preferred stock dividends have been declared and paid to preferred stockholders during 2018 Lorenzo is subject to profits tax rate at 25% $130,000,000 56,000,000 30,000,000 9,000,000 1,400,000 shares 1,100,000 shares $85 per share $5,500,000 Required: 1. Based on Lorenzo's financial information above, calculate the following ratios (all answers should be carried at 2 decimal places): a. Dividend yield for common stock (to be expressed in %) b. Book value per share c. Earnings per share ("EPS") d. Price / Earnings ratio (P/E") (8 marks) 2. Assume the fitness trading industry has an average P/E ratio of 9 times. Based on your answer calculated in 1(d) above, compare Lorenzo's P/E ratio with the industry norm and explain its implications. (3 marks) 3. Discuss the advantages and disadvantages of investment in listed shares. (6 marks)