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The MedTech Company recently reported net profits after taxes of ​$15.8 million. It has 2.9 million...

The MedTech Company recently reported net profits after taxes of ​$15.8 million. It has 2.9 million shares of common stock outstanding and pays preferred dividends of $0.6 million per year.

a. Compute the​ firm's earnings per share​ (EPS).

b. Assuming that the stock currently trades at ​$53.68 per​ share, determine what the​ firm's dividend yield would be if it paid $ 2.94 per share to common stockholders.

c. What would the​ firm's dividend payout ratio be if it paid ​$2.94 per share in​ dividends?

Solutions

Expert Solution

a. EPS $       5.24
Working:
Net profit after tax a $    15.80 million
Preferred dividend b $       0.60 million
Earning for common shareholders c=a-b $    15.20 million
Shares of common stock outstanding d 2.9 million
EPS e=c/d $       5.24
b. Dividend Yield = Annual dividend / Current Selling Price
= $       2.94 / $    53.68
= 5.48%
c. Dividend Payout Ratio = Dividend Paid / EPS
= $       2.94 / $       5.24
= 56.09%

jeff jeffy answered 1 year ago
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