(Calculating EPS, price-to-earnings ratio, and dividend ratios, LO 2) Junor Inc.

(Junor) is a publicly traded company. During its year ended July 31, 2004 Junor reported net income of $3,759,000. During fiscal 2004 Junor declared and paid quarterly dividends of $0.10 per share on its 5,000,000 outstanding common shares. During the year no shares were issued and none were repurchased from investors. In addition, Junor paid $1,000,000 in preferred dividends. On July 31, 2004 Junor’s share price was $11.50.

Required:

a. Calculate the following ratios for 2004. Explain and interpret the meaning of each ratio:

i. basic earnings per share for fiscal 2004 ii. price-to-earnings ratio on July 31, 2004 iii. dividend payout ratio for fiscal 2004