Earnings per share

The table below shows the stock price, earnings per share, and dividends per share for three companies for 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 $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.

Result

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

Solution:

p1=65.704.40=6574414.931814.9p_{1}=\dfrac{ 65.70 }{ 4.40 }=\dfrac{ 657 }{ 44 } \doteq 14.9318 \doteq 14.9
d1=100 1.1665.70=11606571.76561.8%d_{1}=100 \cdot \ \dfrac{ 1.16 }{ 65.70 }=\dfrac{ 1160 }{ 657 } \doteq 1.7656 \doteq 1.8 \%
p2=528.3327.72=16018419.059519.1p_{2}=\dfrac{ 528.33 }{ 27.72 }=\dfrac{ 1601 }{ 84 } \doteq 19.0595 \doteq 19.1
d2=100 0.00528.33=0=0%d_{2}=100 \cdot \ \dfrac{ 0.00 }{ 528.33 }=0=0 \%
p3=69.055.37=690553712.858512.9p_{3}=\dfrac{ 69.05 }{ 5.37 }=\dfrac{ 6905 }{ 537 } \doteq 12.8585 \doteq 12.9
d3=100 1.8869.052.7227=2.7%d_{3}=100 \cdot \ \dfrac{ 1.88 }{ 69.05 } \doteq 2.7227=2.7 \%



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