Chapter 19, Problem 19.15BYP

Analysis Case 19–15

Kellogg’s EPS; PE ratio; dividend payout

• LO19–13

Real World Financials

While eating his Kellogg’s Frosted Flakes one January morning, Tony noticed the following article in his local paper: Kellogg Company Reports Fourth-Quarter and Full-Year Results and Provides Guidance For 2016 (in part)

BATTLE CREEK, Mich., Feb. 11, 2016 /PRNewswire/—Kellogg Company (NYSE: K) Reported full-year 2015 net earnings $614 million, or $1.72 per share.

As a shareholder, Tony is well aware that Kellogg pays a regular cash dividend of $0.50 per share quarterly. A quick click on a price quote service indicated that Kellogg’s shares closed at $72.27 on December 31.

Required:

1. 1. Using the numbers provided, determine the price-earnings ratio for Kellogg Company for 2015. What information does this ratio impart?
2. 2. What is the dividend payout ratio for Kellogg? What does it indicate?