# 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:

$p_{ 1 } = \dfrac{ 65.70 }{ 4.40 } = \dfrac{ 657 }{ 44 } \doteq 14.9318 = 14.9$
$d_{ 1 } = 100 \cdot \ \dfrac{ 1.16 }{ 65.70 } = \dfrac{ 1160 }{ 657 } \doteq 1.7656 = 1.8 \%$
$p_{ 2 } = \dfrac{ 528.33 }{ 27.72 } = \dfrac{ 1601 }{ 84 } \doteq 19.0595 = 19.1$
$d_{ 2 } = 100 \cdot \ \dfrac{ 0.00 }{ 528.33 } = 0 = 0 \%$
$p_{ 3 } = \dfrac{ 69.05 }{ 5.37 } = \dfrac{ 6905 }{ 537 } \doteq 12.8585 = 12.9$
$d_{ 3 } = 100 \cdot \ \dfrac{ 1.88 }{ 69.05 } \doteq 2.7227 = 2.7 \%$

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