Pink Limited Purple Limited Earnings before interest and tax R3 000 000 R4 000 000 Long term interest bearing debt R500 000 R800 000 Earnings attributable to shareholders R2 124 000 R2 822 400 Tax rate 28% 28% Share Capital R2 00 000 R5 000 000 Number of ordinary shares issued 200 000 400 000 Number of ordinary shares authorised 1 000 000 500 000 Current market price of the share R30 R20.00 Dividend per share R5 R3 As a financial manager you are very concerned about the dividend yield and dividend payout ratio as these will be your indicators of the return on your investments. Q.3.1 Calculate the dividend yield for both companies. Q.3.2 Calculate the dividend payout ratio for Pink Limited. Q.3.3 Calculate the price earnings ratio for Purple Limited.
Pink Limited | Purple Limited | |
Earnings before interest and tax |
R3 000 000 |
R4 000 000 |
Long term interest bearing debt |
R500 000 |
R800 000 |
Earnings attributable to shareholders |
R2 124 000 |
R2 822 400 |
Tax rate |
28% |
28% |
Share Capital |
R2 00 000 |
R5 000 000 |
Number of ordinary shares issued |
200 000 |
400 000 |
Number of ordinary shares authorised |
1 000 000 |
500 000 |
Current market price of the share |
R30 |
R20.00 |
Dividend per share |
R5 |
R3 |
As a
Q.3.1 |
Calculate the dividend yield for both companies. |
|
Q.3.2 |
Calculate the dividend payout ratio for Pink Limited. |
|
Q.3.3 |
Calculate the price earnings ratio for Purple Limited. |
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