Question

(Part 1)In 2012 Bard, Inc. (BCR) had sales per share of $36.21, net profit margin of 19.1%, and paid $1.39 dividend per share. The Dividend Payout Ratio and Retention Rate are:
a.21% and 86%
b.32% and 74%
c.20% and 80%
d.50% and 50%

(Part 2)The P/E Ratio:
a.Is used to compare a stock's market value to its book value.
b.Shows how much the investors are willing to pay per dollar of earnings.
c.Measures the performance of assets and earnings in relation to common equity.
d.Measure the efficiency and productivity of a company using the resources that are available and the returns on sales and investments.

Answer 1

Part 1

Sales per share = $36.21

Net profit margin = 19.1%

Net Income per share = Sales * Net Profit Margin = $36.21 * 19.1% = $6.916

Dividend per share = $1.39

Dividend payout ratio = Dividend per share / Net income per share = $1.39 / $6.916 = 0.20 or 20%

Dividend payout ratio = 20%

Retention ratio = (net income per share - Dividend per share) / Net income per share = ($6.916 - $1.39) /$6.916

Retention ratio = 0.80 or 80%

Option "C" is correct 20% and 80%

Part 2

The P/E ratio shows how much the investors are willing to pay per dollar of earnings.

P/E ratio = Market price per share / Earnings per share

Option 'B' is correct