Starbucks has 50,000,000 shares of common stock outstanding, its net income is $51,750,000, and its P/E...

Starbucks has 50,000,000 shares of common stock outstanding, its net income is $51,750,000, and its P/E is 8. What is the company's stock price? What is its dividend payout ratio if it paid $0.70 per share?

Expert Solution

EPS=Net income/Common stock outstanding

=51,750,000/50,000,000

=$1.035 per share

P/E ratio=stock price/EPS

Hence stock price=1.035*8

=$8.28

Dividend payout ratio=Dividend/Earnings per share

=(0.7/1.035)

=0.6763(or 67.63% approx)

jeff jeffy answered 2 years ago

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