Question

ABC Clothing has after-tax income of $15.4 million. It also has 36 million shares of stock outstanding. What is the firm's earnings per share?

Multiple Choice

• $1.54 a share

• $3.60 a share

• $0.86 a share

• $0.43 a share

• $5.14 a share

Last year, a firm earned $3.20 per share. If the current market value for a share of stock is $47, what is the firm's PE ratio?

Multiple Choice

• 0.07

• 6.81

• 14.69

• 21.50

• It is impossible to calculate a PE ratio with this information.

• A corporation's stock has a current market price of $88. The corporation has paid a dividend of $3.95 over the last 12 months. What is the dividend yield?

  Multiple Choice

• 17.96 percent

• 8.98 percent

• 4.49 percent

• 3.49 percent

• 2.49 percent

Assume that you purchased 220 shares of stock for $69 a share, that you received an annual dividend of $1.80 a share, and that you sold your stock for $100 a share at the end of one year. What is the total return for your investment? (Ignore commission amounts for this question)

Multiple Choice

• $7,216

• $22,396

• $396

• $15,576

• $31

Answer 1

1)	$ 0.43 a share
Working:
Earning per share		=	Earning available to shareholders	/	Number of shares outstanding
		=	$       15.40	/	36
		=	$         0.43	a share
2)	14.69
Working:
PE ratio		=	Market Price per share	/	Earning per share
		=	$       47.00	/	$       3.20
		=	14.69
3)	4.49 percent
Working:
Dividend yield		=	Annual dividend	/	Current share price
		=	$         3.95	/	$    88.00
		=	4.49%
4)	$    7,216
Working:
Total return		=	(Dividend gain + Capital Gain)*Number of shares
		=	(1.80+(100-69))*220
		=	$       7,216