Question

The following information is available for Windows Corp. for the years of 2015 and 2014: 2015 2014 Market price of common stock $28.00 $43.50 EPS $2.18 $1.80 . Dividents per share $0.94 $0.86 A. Calculate the dividend yield ratio for both 2015 and 2014. B. Interpret the yield ratio in terms of whether it is high or low, or whether it indicates a steady dividend policy, and whether Windows Corp. appears to be growing or to be stagnant.

Answer 1

Requirment A
Dividend yield ratio = Dividend per share / Market price of common stock
	2015	2014
Dividend per share	0.94	0.86
Market price of common stock	28.00	43.50
Dividend yield ratio =	3.36%	1.98%
Requirment B
Dividend payout ratio = Dividend per share/EPS
	2015	2014
Dividend per share	0.94	0.86
EPS	2.18	1.8
Dividend payout ratio =	43.12%	47.78%
Yield ratio is high in 2015 compared to 2014
Dividend policy is not steady as differe in dividend payout ratio
Windows corp. Appears to be growing as EPS is increasing and dividend payout ratio is decreasing