Dawn Alive reported the following for 2012. $\begin{array}{llcc}
\text {Ending market price } &\$40.75 \
\text { Earnings per share: } &\
\text { Basic } &2.50\
\text { Diluted } &2.08\
\text { Dividends per share } &1.10\
\end{array}$

The price/earnings ratio and dividend payout were:
A)19.59 and 52.88%
B)16.30 and 52.88%
C)16.30 and 44.00%
D)19.59 and 44.00%
E)37.04 and 52.88%

Question

Dawn Alive reported the following for 2012. $\begin{array}{llcc}
  \text {Ending market price  } &\$40.75  \
 \text { Earnings per share: } &\
 \text { Basic } &2.50\
 \text { Diluted } &2.08\
 \text { Dividends per share } &1.10\
\end{array}$

The price/earnings ratio and dividend payout were:
A)19.59 and 52.88%
B)16.30 and 52.88%
C)16.30 and 44.00%
D)19.59 and 44.00%
E)37.04 and 52.88%

Quizplus · Accepted Answer

The price/earnings (P/E) ratio is calculated by dividing the market price per share by the earnings per share (EPS). Using the basic EPS of $2.50, the P/E ratio is $40.75 / $2.50 = 16.30. However, the correct calculation should use the ending market price of $40.75 and the diluted EPS of $2.08, giving a P/E ratio of $40.75 / $2.08 = 19.59. The dividend payout ratio is calculated by dividing the dividends per share by the earnings per share. Using the basic EPS of $2.50, the dividend payout ratio is $1.10 / $2.50 = 44%. Therefore, the correct answer is 19.59 for the P/E ratio and 44% for the dividend payout ratio.

Dawn Alive Reported the Following for 2012 The Price/earnings Ratio and Dividend Payout Were: A)19

Dawn Alive Reported the Following for 2012 The Price/earnings Ratio and Dividend Payout Were:
A)19