Earnings per share

The table below shows the stock price, earnings per share, and dividends per share for three companies in a recent year:

Deere &Co. Price $65.70 earnings per share $4.40 Dividends per share $1.16
Google price $528.33 earnings per share $27.72 Dividends per share $0.00
The Coca-cola Company price is $69.05 earnings per share, $5.37 Dividends per share, $1.88

A. Determine the price-earnings ratio and dividend yield for the three companies. Round to one decimal place.
B. Explain the difference in these ratios across the three companies.

Correct answer:

p₁ =  14.9
d₁ =  1.8 %
p₂ =  19.1
d₂ =  0 %
p₃ =  12.9
d₃ =  2.7 %

Step-by-step explanation:

$p_1=\frac{65.70}{4.40}=\frac{657}{44}=14\frac{41}{44}=14.9$

$d_1=100\cdot \frac{1.16}{65.70}=\frac{1160}{657}\%=1.8\%$

$p_2=\frac{528.33}{27.72}=\frac{1601}{84}=19\frac{5}{84}=19.1$

$d_2=100\cdot \frac{0.00}{528.33}=0\%$

$p_3=\frac{69.05}{5.37}=\frac{6905}{537}=12\frac{461}{537}=12.9$

$d_3=100\cdot \frac{1.88}{69.05}=2.7\%$

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