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VI. Bonus Question (3 marks) The following information for 2021 is provided for two public companies in the same industry: Flora Inc. Fauna Ltd. Earnings
VI. Bonus Question (3 marks) The following information for 2021 is provided for two public companies in the same industry: Flora Inc. Fauna Ltd. Earnings per share......... $ 10.50 $ 3.25 Dividends paid per share.... 2.50 1.50 Market price per share ....... 120.00 28.00 Net sales (in 000's). 100,000 10,000 Gross profit .... 46,000 35,000 Profit 8,100 970 Instructions: Answer the following questions about the two companies. Use the information provided to calculate the ratios needed to support your answers. a) Based on the above information, which company is more profitable? Why? b) Which company are investors more optimistic about? Why? c) in which company would investors prefer to buy shares for growth potential? In which company would they prefer to buy shares if their goal is dividend income? Explain your reason for both
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