The Following Data Were Reported for Favre Company Required:
Calculate Each of the Following Ratios

question 98

Essay

The following data were reported for Favre Company: $$\begin{array} { l l } \text { Net income } & \$ 275,000 \\\text { Total dividends declared and paid on common stock } & \$ 0.60 \text { per share } \\\text { Common stock, par } \$ 10 & \$ 1,750,000 \\\text { Market price } & \$ 20.00 \text { per share } \\\text { Cash flows from operating activities } & \$ 280,000\end{array}$$ Required:
Calculate each of the following ratios. Round your answers to two decimal places.
A. Dividend yield
B. Price/earnings ratio
C. Quality of income

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Definitions:

Absorption Costing

A method in accounting where all costs of manufacturing are absorbed by the units produced.

Variable Costing

A costing method that includes only variable production costs (direct labor, materials, and overhead) in product costs, excluding fixed costs.

Fixed Overhead

Denotes the regular, recurring costs associated with running a business that do not fluctuate with production volume, such as rent, salaries, and utilities.

Net Income

Net income is the total earnings of a company after all expenses and taxes have been deducted from total revenue, indicating the company's profit.