Business, 13.07.2021 19:30 smrichardson0220

QUESTION 5: FINANCIAL RATIO ANALYSIS [20 MARKS] Relevant information related to Company A is provided in the table below. [20 marks).
Variables
Company A
Number of shares
1,000,000
EARNINGS BEFORE INTEREST & TAX (EBIT) K2,000,000
Debt: Equity ratio (D:E)
50:50
Tax rate
50%
Payout ratio for the next year's dividend 50%
Market Price Per Share
K10
Net profit after tax (NPAT)
K800,000
This year's profits are paid out as dividends in the following year in accordance with the dividend
payout policy detailed above. Based on the above figures, calculate the following ratios and also define
the ratios in question:
(a) Return on Equity (ROE) [2 marks]
(b) Amount of dividend paid [2 marks]
(c) Dividend per share [2 marks]
(d) Dividend yield [2 marks]
(e) Interest and tax expenses [2 marks]
(1) Market capitalization (equity) for company A (2 marks)
(g) Earnings per share (EPS) [2 marks]
(h) Price Earnings Ratio (P/E) [2 marks]

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QUESTION 5: FINANCIAL RATIO ANALYSIS [20 MARKS] Relevant information related to Company A is provid...

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