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You are an analyst for Wheel Wealth Management. One of your clients is intrigued by three companies he has seen recently as the focus of news stories. He has asked for your advice on which of the three companies he should invest. Your preliminary analysis of the three companies Hi Tech Company, Sustainable Industries Inc., and Maturation Corporation based on their price earnings ratios suggests that each company is priced appropriately for its investment class. Your focus now is on the companys ability to satisfy your clients stated investment objective. Your client is nearing retirement and has expressed a desire for current income in the form of dividends as well as the potential for growth. You have enlisted the assistance of your staff to create a Tableau Dashboard depicting trends in earnings per share, dividends, and reinvested earnings for the most recent five years for each of the three companies.

Drawing from the data, assess the following (CHOOSE ONE ONLY)

1. Which company has the highest dividend payout ratio during the most recent five years?

A. Maturation Corporation

B. Sustainable Industries

C. Hi Tech Company

2. Which companys EPS has grown more rapidly during the most recent five years?

A. Maturation Corporation

B. Sustainable Industries

C. Hi Tech Company

3. Sustainable Industries EPS has grown steadily in each year except for a drop in 2019. What seems to be the primary cause for the decline that year?

A. The companys net income had a one-year decline

B. The companys dividends declined that year

C. The company had an increase in outstanding common shares, not offset by share buybacks

4. What should be your recommendation?

A. An investment in Sustainable Industries is most in line with the investors desire for current income in the form of dividends as well as the potential for growth

B. Hi Tech Company has the most potential for growth in stock value as evidenced by large percentage reinvestment of earnings as well as a high dividend payout ratio

C. Maturation Corporation has a high dividend payout ratio and therefore most suitable to meet the clients objectives

EPS & Payout Ratio Company Name Selected (All) Hi Tech Company O Maturation Corp O Sustainable Industries Reinvested Dividends Payout Ratio 90.0% 3.00 80.0% 2.50 70.0% 60.0% 2.00 50.0% 1.50 40.0% 30.0% 1.00 20.0% 0.50 10.0% 0.00 0.0% 2017 2018 2019 2020 2021 2017 $2.98 EPS 2018 $2.98 $46,520 15,605 2019 $2.99 $47,023 15,749 2020 $3.15 $48,558 15,422 2021 $3.14 $49,864 15,903 Net Income Weighted Average Shares $46,001 15,433